Sri Lanka revives automatic fuel price revision formula

The government has proposed a return to the automatic fuel price formula after squandering billions on a failed attempt to 'unplug' Sri Lanka from the global economy.






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The government has proposed a return to the automatic fuel price formula after squandering billions on a failed attempt to 'unplug' Sri Lanka from the global economy. "Recurrent expenditure remains vulnerable to rising oil cost if we do not remove our fuel subsidy," Finance Minister Sarath Amunugama said in his budget speech.

"Therefore, fuel subsidy will be limited to Rs.

3,000 million in the Budget and fuel prices will be adjusted in line with formula prices next year."

The government is proposing to target subsidies to three wheeler operators, public transport services, the fisheries sector and maintain the kerosene subsidy for rural people without electricity.

In 2004, the government wasted Rs.

20 billion on the fuel subsidy and an almost similar amount is expected to be spent by end 2005.

The removal of the subsidy is expected to sharply increase government revenues this year and help cover some of the expenditures.

The minister said the total increases proposed in respect of salaries, pension, Samurdhi allowances and other on welfare services were around Rs. 19 billion for 2006.