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Oil Drain

July 4, 2009 (LBO) - The Sri Lanka unit of the Indian Oil Corporation is running out of cash and may not be able to import the next consignment of oil as crude prices rise and taxes bite into revenue, an official said.
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Based on yesterday's Singapore wholesale refined product prices released by the Central Bank and the Sri Lanka rupee at 115.10 to the US dollar, petrol was only 52.

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50 rupees a litre while diesel was 52.60 rupees a litres.

On Friday Sri Lanka's retail petrol was 247 percent above the Singapore benchmark, and diesel 138 percent.

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The government is taxing petrol by about 75 rupees a litre and diesel by about 27 rupees a litre, according to industry officials.

Sri Lanka does not have an automatic price formula but prices are changed largely on the whims of politicians.

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Diesel which is used by business and the super rich sections of society who can afford diesel luxury sports utility vehicles and cars or have access to duty free imports permits, is kept low, due a belief that inflation is a diesel related phenomenon.



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In the past when the government subsidized petroleum and made up for revenue losses with printed money from the Central Bank, inflation has risen steeply.

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