Fuel subsidy funds will end by June as CPC continues to lose money on diesel, with no decision yet on future fuel prices.
The fuel subsidy provided by the government is expected to run out by the end of June, Ceylon Petroleum Corporation Chairman Janaka Rajakaruna has revealed.
Rajakaruna made the disclosure while appearing before the Parliamentary Committee on Public Finance, chaired by Parliamentarian Dr. Harsha de Silva.
According to the CPC Chairman, the government has been providing a subsidy of Rs. 100 per litre of diesel and Rs. 20 per litre of petrol since April.
It was revealed during the committee meeting that Rs. 15.3 billion had been spent on the subsidy in April alone.
The total subsidy allocation is estimated at around Rs. 20 billion.
However, based on current trends, Rajakaruna said the allocated subsidy fund would be exhausted by the end of June.
He further emphasized that the government has not yet taken a decision on whether the subsidy will continue beyond June.
Despite the government providing Rs. 100 as a subsidy on diesel, April data shows that the CPC is still incurring a total loss of Rs. 129 per litre of diesel.
Rajakaruna pointed out that even after the government subsidy is applied, the Corporation continues to suffer a loss of Rs. 29 per litre of diesel.
The committee also held an extensive discussion on the difficulties faced by the CPC in sourcing foreign exchange required to purchase fuel.
The Chairman stated that during periods when dollar shortages emerged in the market, the Corporation was able to obtain dollars at a rate not exceeding Rs. 350 through the intervention of the Central Bank.
Dr. Harsha de Silva, Chairman of the Committee on Public Finance, warned that attempts by the Corporation to obtain large amounts of foreign exchange, such as US$ 50 million at a time, without a proper plan could push the exchange rate upward.
He further pointed out that any increase in the dollar rate would eventually raise the prices of goods and services, placing additional pressure on the entire population.
Responding to the concern, the CPC Chairman said that under the current plan, the Corporation is taking steps to obtain US$ 11 million per day through banks.
