SJB questions Kanchana over suspension of fuel pricing formula, USD 3 bn debt to suppliers

‘Petroleum, water services, too, should be under electricity regulator’

By Shamindra Ferdinando

The Convenor of the combined trade union front, in fuel, ports and power sectors of the Samagi Jana Balavegaya (SJB), Ananda Palitha, yesterday (04) alleged that consumers had been deprived of the benefit of the continuing drop in world crude oil prices as the government had suspended the cost-reflective fuel pricing formula, introduced in late May last year.

Having declared that the new pricing formula would be adjusted bi-monthly, or monthly, the government had conveniently discarded the mechanism, Ananda Palitha alleged.

Power and Energy Minister, Kanchana Wijesekera, owed the public an explanation why the pricing formula had been suspended for about six months.

Responding to The Island queries, the former CPC/Ceylon Petroleum Storage Terminals Ltd. (CPSTL) employee claimed that a litre of petrol, both 92 and 95, as well as diesel, could be sold much less than the current prices charged from consumers.

The failure on the part of the Power and Energy Ministry to implement the pricing formula had paved the way for the Indian Oil Corporation’s subsidiary in Sri Lanka, Lanka IOC, to earn massive profits at the expense of the bankrupt country.

Lanka IOC, incorporated in 2003, to carry out retail marketing and bulk supply to industrial consumers owns one-third of shares in CPSTL, Palitha said.

The trade union activist said that a joint parliamentary group should inquire into what was going on in the petroleum sector as successive ministers, given the responsibility of managing the vital sector, caused irreparable harm by pursuing agendas inimical to the national economy. The incumbent Minister Wijesekera is not an exception, the trade union leader added.

Had petroleum and water utilities, too, been brought under the Public Utilities Commission, established in 2002, as was originally envisaged, the issues at hand could have been handled in a different way, the SJB activist said.

In spite of the Commission being designated the regulator for petroleum and water utilities, successive governments conveniently refrained from bringing them under the Commission by way of Parliamentary Acts, Ananda Palitha said.

Ananda Palitha pointed out how the Chairman of the Commission, Janaka Ratnayaka, in spite of quite heavy political pressure, stood by the public in the face of relentless pressure exerted by the government, hell-bent on going ahead with massive tariff hikes.

The trade unionist said that all political parties, represented in Parliament, should be held accountable for the developing crisis. According to Ananda Palitha, the non-inclusion of petroleum sector and water services industries was deliberate and meant to prevent the regulator from doing his job, in the interest of the country, consumer and fair play.

Referring to the continuing crisis at the Sapugaskanda oil refinery, Ananda Palitha said that those who disrupted the supply of crude oil, delivered heavy blows to the CEB. “By disrupting operations, they thwarted the supply of naphtha, diesel and furnace oil. Everyone knows who benefits from such disruptions,” Ananda Palitha said.

Commenting on President Ranil Wickremesinghe demanding explanations from the CPC and SriLankan Airlines over the payment of bonuses, at the end of 2022, Ananda Palitha asked how Wickremesinghe, who held the Finance portfolio, didn’t know what was going on.

The Wickremesinghe-Rajapaksa government should be ashamed, if it really didn’t know until the workers of those institutions were paid bonuses. Referring to a media statement, issued by the Presidential Media Division (PMD), Tuesday evening, in this regard, Ananda Palitha questioned the status of CPSTL, jointly run by the CPC and Lanka IOC.

Ananda Palitha said that the CPC owed suppliers as much as USD 3 bn whereas the government was down on its knees before the Washington-based International Monetary Fund (IMF) for USD 2.9 bn spread over a period of four years.

Of this staggering amount, the CPC owed USD 700 mn to India and this needed to be settled in March-April this year, Ananda Palitha said, adding that the country owed a further USD 800 mn to other suppliers. There was also a long outstanding payment to Iran, believed to be USD 425 mn.

The political activist alleged that USD 45 mn paid for the procurement of crude oil, under controversial circumstances, was missing.

Meanwhile, the government was in the process of clearing the way for the privatization of both the CEB and the State Banks, he alleged.