The Public Utilities Commission of Sri Lanka (PUCSL) claimed the fuel price revision of 17 July was insufficient in comparison to current global fuel market prices.
They said there should be a transparent system in place to determine fuel prices, which have a significant impact on the country’s economy.
As a result, the PUCSL proposed implementing a transparent price formula because the Ceylon Electricity Board is incurring unnecessary expenses for electricity generation due to the lack of a proper fuel price formula.
PUCSL Chairman Janaka Ratnayake emphasised that the method of determining the fuel price should be implemented in such a way that the people can know the fair cost.
In a special statement, he noted that he had also submitted information to the COPE in this regard, and that the price of a litre of fuel in Sri Lanka should continue to fall in line with current global market prices.
“Fuel prices should be determined in a straightforward manner that anyone can understand based on reasonable costs. Furthermore, the fuel price formula should be implemented in such a way that market irregularities are avoided. Without a proper timeframe, the fuel price should not be decided on the basis of other objectives. Fuel prices that are not based on reasonable costs have had a significant impact on electricity tariffs. Tariffs for electricity are set using a transparent methodology based on reasonable costs. All costs associated with the generation and distribution of electricity are disclosed to all parties, including the electricity consumer and the general public,” he said.
Ratnayake explained that fuel plants currently contribute 35 percent of electricity generation and that these power plants use all three types of fuel, namely diesel, kerosene, and naphtha. He said approximately 3,250 metric tonnes of fuel are consumed daily to generate electricity for continuous supply.
“We need to know whether we are paying a fair price for fuel when determining electricity charges. A litre of diesel fuel is currently supplied to these power plants for Rs 419. However, based on customs data, the fair price per litre should be Rs 191. As a result, power plants are charged an additional Rs 228 per litre. As a result, electricity consumers face an additional burden of Rs 270 billion per year. The impact of the proposed power tariff revision can be minimised if fuel for power generation is supplied at reasonable prices,” he said.
According to the statement, there is currently a downward trend in crude oil prices in the global market, and to take advantage of this, the refineries in Sri Lanka can be continuously supplied with crude oil, as well as all types of fuel required for electricity generation, at the lowest prices.
Ratnayake emphasised the importance of implementing a price formula and price regulation with a transparent and scientific basis, similar to the price system used for electricity charges, as soon as possible for fuel.
“Laws pertaining to the petroleum industry, that legally transfer regulatory powers, have yet to be passed by Parliament. As a result, the commission or any other regulatory body has no legal authority to intervene in petroleum regulation. I propose that the PUCSL be given responsibility for petroleum regulation as soon as possible. Then a transparent fuel pricing system can be implemented. Then objectives like fuel price regulation, efficient distribution, and high service level and quality can be met. This type of regulatory mechanism can ensure price stability in the power and transportation sectors by providing fuel to both the petroleum consumer and the power sector at reasonable prices,” he said.