SC orders new petrol price formula

Wasantha RAMANAYAKE

The Supreme Court yesterday directed the Treasury Secretary to bring in a new pricing formula to reduce the price of petrol on Wednesday, December 17.

The Court directed Secretary Treasury Sumith Abeysinghe to pass the benefit of the cancelling of the hedging agreement in the public interesting litigations to the people of the country.

In terms of the Court directions the CPC is to base on the bench mark price of US$ 56 per barrel of petrol which was the price last month, in the calculation of the new formula.

The Court also directed that the government tax component should not exceed 100% of the production cost plus the overhead charges of the CPC. Under this formula it is expected that one litre of petrol would be priced around Rs. 100.

The Bench comprised Chief Justice Sarath N. Silva PC with Justice K. Sri Pavan and Justice P.A. Rathnayake PC .

According to the Court order the amount that would go down below the bench mark price to be absorbed into the Government tax component and thus would be able to keep the prices constant.

In case there is an increase in the price of a barrel of petrol exceeding the Bench mark price of US $56, the tax component should be decreased accordingly up to 75% cushioning the overall effect on the consumers.

Chief Justice Sarath N. Silva PC noted that with the cancelling of the agreement the CPC is saving some US$ 46 million for this month that otherwise should have been paid to Standard Chartered Bank. He further added as a result the CPC is now in a position to reduce the petrol prices.

He noted that the current price of a barrel of petrol is around US$ 42.

The Court also made an order suspending with immediate effect Deputy General Manager (Finance) Lalith Karunaratne of the CPC.

This was a sequel to an application by counsel Uditha Egalahewa for petitioner who submitted that the Deputy General Manager was one of the signatory to the agreement along with the former Chairman Asantha de Mel.

He submitted that the petitioner fears that the vital documents would be removed as he has the access to them.

The Court also directed the Monetary Board of the Central Bank to impound, if necessary, any documents belonging to the Standard Chartered Bank with the assistance of the CID pertaining to the hedging agreement.

Counsel M.A. Sumanthiran for intervening petitioners Nihal Sri Amarasekera and Vasudeva Nanayakkara submitted Court that the bank is in possession of documents of certain payments made to the officials involved in the agreement.

The Monetary Board was also ordered to proceed with the investigation into the hedging agreement and to take necessary actions accordingly.

Petitioner Laughs Chairman C.H. Wegapitiya filed the rights application against the hedging agreement stating that it was arbitrary and illegal while three petitioners Thiniyawala Palitha Thera, UNP Parliamentarian Ravi Karunanayake and Attroney-at-Law Ravi Jayawardane filed the right application against high petrol prices.

Counsel Uditha Igalahewa appeared for C.H. Wegapitiya.

Counsel Viran Corea appeared for the other three petitioners.

Dr. Harsha Cabral PC appeared for the Monetary Board of the Central Bank. Deputy Solicitor General S. Rajaratnam appeared for the respondents.

Mohan Pieris PC appeared for the CPC.