The consumers are back to square one, as far as petrol is concerned, with the LIOC and the CPC selling petrol at the same price following the decision of the former to jack up its petrol prices on Christmas eve.

The LIOC decided to increase its prices by Rs. 22 last Wednesday. The cabinet will be meeting in January in order to look into a solution with regard to the CPC prices in light of the Supreme Court order.

However, this increase by the LIOC has irked many civilians, trade unions and political parties, some of them pointing fingers at the government for the price increase of LIOC petrol.

The Supreme Court on December 15, issued an order to reduce petrol prices to Rs. 100 per litre, according to the pricing formula presented to court by Treasury Secretary Sumith Abeysinghe.

The government on Tuesday, December 23, decided not to reduce fuel prices in keeping with the SC order until the situation was studied further.

The decision was taken following a cabinet meeting to consider the court order.

The Ministers were asked by President Mahinda Rajapakse to study the order and submit their recommendations at the next cabinet meeting scheduled for December 31.

The recommendations will be taken up on January 7 next year in case the cabinet does not meet on December 31.

By the government’s continuous authoritarianism and the failure to abide by the recent Supreme Court (SC) directive to the Treasury Secretary to bring down the price of petrol, the Rajapakse government has not only started to confront the supreme court of the country but is also taking this failed state to a unlegislated country charges the JVP affiliated National Trade Union Centre (NTUC).

Due to the failure to abide by the SC order on the petrol prices the present administration is burdening the masses to cover up its bad economic policies and also allowed the Indian Lanka Oil Company (LIOC)- the Indian fuel industry to gain more income, they charged.

Subsequent to the December 15 SC order to revise the petrol prices by implementing the pricing formula presented by the Treasury Secretary, the government’s failure to abide by the order has not only led to a confrontation with the judiciary but has also denied the people their right to purchase fuel at a reduced price according to the main opposition UNP.

The government claims that if the SC order was implemented the state would lose its sources of revenue, which would effect the free services in the country such as education and health. It also claims that it would have to discontinue the subsidies given to the agriculture sector.

The UNP last week claimed that this loss of revenue could be covered up if the government brought down the cabinet of ministers to 35 and put a complete halt to the bribery and corruption within the government.

However a Senior Finance Ministry official on the basis of anonymity refuting the government charges of losing revenue if petrol prices were reduced, told The Sunday Leader that the unreasonable taxes imposed by the government on fuel has heavily impacted the cost of living (CoL).

"This is an absolute corrupted state. The statistics clearly show how the government is burdening the masses today. Those who are at the Treasury will bear testimony as to how the government instructs the CPC to give fuel on credit to the armed forces and the police, to the transport sector, to Ceylon Electricity Board (CEB), Mihin Lanka and Air Lanka, health sector, education sector etc."

"Although the treasury directs the CPC to give fuel on credit, it is disheartening to note that the Finance Ministry has so far failed to take action against the CPC for failing to act when they do not receive the payments on time. When the CPC starts to pressurise the treasury for its intervention to get the money back, there were many instances that the government has added many taxes to fuel to cover up these losses," claimed the treasury sources.

Treasury sources said that the reduction of fuel prices will not affect the country’s development work, as well as the on going relief work in the country. If they are really worried that they would not be able to develop the country and fail to fight terrorism due to the government income being blocked, then why cannot they stop the proposed relaunching of the budget airline Mihin Lanka? For this unsuccessful airline alone the government has allocated Rs.6000 million from the 2009 budget while they are still mum over this airline’s failure to pay the CPC its dues," claimed the treasury sources.

Meanwhile the NTUC, which has launched a poster campaign urging the government to abide by the SC order said that Minister Yapa’s argument over the present issue on fuel prices is the first step of their planned programme to curtail subsides and relief given to certain sectors, in order to save money as a result of the financial crisis.

"President Mahinda Rajapakse in his budget speech said that he has increased the health, defence and education sector budgetary allocations in order to provide a better service to the respective sectors. The government has allocated Rs. 3000 million to the education sector. If so why cannot the government rectify the salary anomaly issue that has erupted several years ago? It is also interesting to note that the government has allocated Rs.6000 million to the bankrupt Mihin Lanka but has failed to allocate enough funds for the sake of our future generations," Convener NTUC Samantha Koralearachchi told The Sunday Leader.

According to him the government was planing to discontinue the distribution of free school text books, uniform materials and other subsidies from the beginning but with the latest SC order they are claiming that they will have to discontinue all these programmes if the petrol prices have to be reduced.

"The government claims that it would have to stop the free text books and the uniform materials for the children while they would have to abandon the war effort and the free medical service. This is absolutely incorrect. That was their proposed plan from the beginning as the government coffers do not have enough funds to spend on these items. To pass the ball on to the opposition parties, the Rajapakse administration very wisely claims that if the SC order is to be implemented they will discontinue these relief work."

"Although the government claims that they have allocated so much of funds to the betterment of these essential services in the country, we are well aware as to how the government releases money for the betterment of these sectors. If taken the country’s health sector there are several issues pertaining to it due to government’s failure to allocate the necessary funds to run the hospitals," Koralearachchi said.

He said that there are drug shortages in the country and many of the service providers to government hospitals have discontinued their services and the electricity and water bills are not settled for months. "When taking the education sector, the Education Ministry continuously failed to provide the student and teachers guidebooks at the correct time while certain provinces collects money for the term test papers and also has failed to rectify the teachers’ salary anomalies. Apart from these, Chief Minister Western Province directed all the principals in the province to collect essential canned food items from the students to be sent to the battlefront," Koralearachchi added,

While the opposition parties are urging the government to implement the SC order without confronting the judiciary, the Ceylon Petroleum Corporation (CPC) sources revealed as to how the government has added unfair taxes to petroleum products that is refined in the country.

According to CPC internal sources the government could easily sell a litre of petrol at Rs.98, two rupees less than the SC directive. "First the government said that they did not receive the SC order paper to implement the ruling, but once received they have not only failed to implement the directives but also has taken further time to study the details. Now we have learnt that the government has given the copies of the order to all the cabinet ministers to study the contents thoroughly and to give their opinions on January 7 when the cabinets meets next," said the CPC sources.

The CPC officials also said that the government had pressurised the LIOC to increase the prices, as the CPC was losing millions of rupees on a daily basis.

"As the government knew that if the LIOC kept on increasing their revenue daily the CPC would face a severe financial crisis within a few days beyond redemption and decided not to deliver the LIOC orders on time in order to put them in difficulty. Considering all these intricacies the LIOC had to increase their petrol prices in line with the CPC prices," CPC officials added.

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The Jathika Sevaka Sangamaya Petroleum Corporation Branch (JSSPCB) blamed the government for its failure to reduce petrol prices and said that the government is taxing people in order to cover up the economic mismanagement policies and to maintain the world’s largest cabinet of ministers.

Secretary JSSPCB Ananda Palitha told The Sunday leader that although the government claims that if the petrol prices are reduced all subsidies given would have to be stopped in order to cover up the losses incurred by the government it was a bogus claim.

"Although the government says that they have not taxed the fuel consumers unnecessarily, it is our sole responsibility to tell the people of this country that this so called people’s government is gaining a lot of revenue after levying all the taxes in petroleum products. Though the Rajapakse administration is trying to convince the people that the government is selling petroleum products without any additional taxes it is the other way around," Palitha asserted.

According to Palitha, 70% of the country’s entire daily fuel need is refined at the Sapugaskanda refinery.

"Out of our daily diesel requirement 50% - 60% and 70% of daily petrol need is refined at Sapugaskanda. It is also able to refine 900 MT tons of kerosene daily. For a day the country consumes only 300 mt. tons of kerosene and the remaining 600 mt. tons are sold to airlines as furnace oil for aircrafts at a higher cost. According to the government’s argument unless they add the customs duty and port charges apart from the other handling charges to the final petroleum products the CPC would incur losses but to say so is misleading the general pubic," Palitha further added.

Palitha further said that this pricing formula could apply to the petroleum products that are imported but the question is as to why the government is imposing the same taxes to the fuel that is locally refined.

"The government adds Rs.35 to each litre of fuel as customs duty while each mt. ton of fuel is charged yet another 3% of the cost as port charges while other handling charges too are added. The question is why do this government impose port charges and customs duty for the fuel that is refined locally. The CPC when purchasing crude oil include the premium to the cost. The government could only impose these taxes for the 30% daily need that is imported while it should not add the taxes for the rest of the 70% that is refined locally As a result of this unethical taxing system the country has to pay ‘bogus’ taxes for the locally produced 70% fuel need," Palitha further stated.

According to Palitha the government is still able to sell petrol foRs.87 per liter without losing revenue although it has failed to pass the benefit to the masses in order to earn more and more to cover up the bribery and corruption within the country and to maintain the world’s largest cabinet.

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Sunil Wickremaratne from the ABC Filling Station Dehiwela when queried as to how they fared during the time the LIOC was selling the petrol at Rs.100 per litre, told The Sunday Leader that they were threatened by the local police and the CPC officials, if the shed does not have enough stock to meet the demands.

"Since the LIOC increased their prices we are now getting business as usual but during the past few days when the LIOC reduced the prices we could not sell more that 300 liters per day comparing to the sale that we had before. Earlier when one order (6600 liters) is delivered it lasts around three days but when the worst happened only 300 liters were sold which was a 90% drop of sales and the loss for the past few days are yet to be calculated," added Wickremaratne.

Wickremaratne further said that the all the private fuel stations that amount approximately little above 200 had to suffer immensely due to government’s failure to compete with the LIOC but said that it was surprising to see how the government is ignoring the SC order and urged the officials concerned to abide by the supreme law of the country as the judiciary would never deliver such an order unless the government incurs profits by selling at Rs.100.00 per litre.

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The Lanka Indian Oil Company (LIOC) on Wednesday decided to increase its petrol price by Rs. 22, thereby equalling the price of petrol sold by Ceylon Petroleum Corporation (CPC).

The LIOC had reduced its petrol price to Rs. 100 on December 20, following the Supreme Court ruling on December 16.

The sales of LIOC petrol increased during the period when the organisation reduced its prices from Rs. 122 to Rs. 100. Long queues of vehicles were seen at the LIOC sheds during the period petrol was sold at the reduced price.

IOC officials said that the sales of LIOC petrol increased during the price reduction, as was evident by the long queues outside its sheds island wide.

According to its Managing Director, K.R. Suresh Kumar, the sales increased by 30 to 40% due to the price reduction. "The increase in sales was very evident when we saw the long queues in our sheds."

Though the LIOC sales were higher than the CPC during the period, Suresh Kumar said that the company was incurring losses, as the petrol was imported from India paying high taxes. Suresh Kumar added that the LIOC does not purchase from the government.

"We never buy anything from the government. We import it from India. We have to pay high taxes when we import the petrol. Therefore, we were losing around Rs. 25 to Rs. 30," he said.

Suresh Kumar on Wednesday said that the LIOC was reviewing the situation and would take appropriate steps to rectify the issue faced by the company.

The LIOC subsequently decided to increase the price of Petrol to Rs. 122 the same day with effect from December 25. "It is too early for us to see how the sales were, as Thursday (25) was a holiday. The sales increased by 30-40% when the prices were reduced. I think things will be back to how it was earlier, as both the LIOC and the CPC are selling petrol at the same price," Suresh Kumar added.

Suresh Kumar denied reports that there was pressure from the government quarters to increase its petrol prices. "We were not pressurised by the government at any point," he said.

The LIOC has around 150 sheds in the country, including the franchisee sheds, according to Suresh Kumar.