Petrol, furnace oil prices reduced

Uditha Kumarasinghe, Irangika Range and Sandasen Marasinghe

KOTTE: Prime Minister Ratnasiri Wickramanayaka told Parliament yesterday that the Government as pledged by President Mahinda Rajapaksa in his Budget speech has further reduced the price of a litre of petrol by Rs. 20 and a litre of furnace oil by Rs. 10 with effect from yesterday.

According to the price formula, the Government will explore the possibility of further reducing the local fuel prices in keeping with the reduction of the international fuel prices, he said.

The Premier speaking at the Debate on the Special Committee Report on 21 Ministries said the Government when implementing its fuel formula has not imposed Customs duty, production tax and VAT on Kerosene which is largely used by the low income consumers and those engaged in agriculture and fisheries sectors.

Except a Rs. 2.50 production tax imposed on a litre of Diesel, the Government has removed the Customs duty and VAT on Diesel which is used for public transport and the industrial sector.

The Government has imposed a Rs. 25 production tax per litre of petrol. But the Government has reduced the 15 per cent VAT imposed on petrol to five percent. Nearly 60 per cent of petrol is used for cars and motorcycles, he said.

Having considered the impact on the Cost of Living and the economy, the Government did not increase the local fuel prices in accordance with the increase of international fuel prices.

In May, 2008, a litre of Diesel would have been increased up to Rs. 152 while a litre of Kerosene would have increased up to Rs. 129. But a litre of diesel was sold at Rs. 110 and a litre of kerosene was sold at Rs. 80 according to the price formula implemented by the Government, he said.

The President in his Budget Speech pointed out that we have to be very concerned on the unstable price fluctuation of fuel in the international market. In order to provide some relief to the people, steps were taken to reduce the taxes imposed on Petroleum when fuel prices in the World Market increased.

The Premier said it is expected that the price of a barrel of crude oil would be between 65 to 75 US Dollars. Now this is around 50 US Dollars.

The policy of the Mahinda Chintana is to formulate a tax policy to safeguard our local products.

The Government has also laid key emphasis when the tax policy is formulated on essential consumer goods. At present, our local producers have been encouraged due to the moves taken by the Government.

As a result, paddy production, fresh milk, maize and salt industries have shown a considerable improvement from year 2006.