Officials unable to say whether foreign fuel suppliers ease dollar pressure

Ceylon Petroleum Corporation (CPC) officials were unable to tell the Committee on Public Finance (CoPF) whether foreign fuel suppliers were easing pressure on Sri Lanka’s foreign exchange resources by bringing in dollars to finance imports or obtaining them from local banks.

The question arose during a discussion on fuel pricing and subsidies, when a committee member asked how the companies financed their fuel shipments.

The member said reducing pressure on the country’s available foreign exchange had been an objective of opening the fuel market to foreign suppliers. Whether the companies brought their own dollars or purchased them locally was therefore important in assessing the benefits of that decision.

An official acknowledged that he did not know the exact answer. He referred to a separate payment involving a company and a Central Bank decision, but the member clarified that the question concerned foreign exchange used for fuel imports.

The member asked the Ministry Secretary to check the position, noting that higher import prices increased the dollars needed to maintain supplies.

Members also questioned how suppliers’ purchasing arrangements were reflected in the costs submitted for fuel pricing and subsidy calculations.

They asked whether companies obtained fuel from their parent companies’ overseas refineries or bought it from other sources. One member questioned whether a supplier could benefit from lower production costs at an affiliated refinery while receiving a subsidy in Sri Lanka.

Officials said the pricing formula used each company’s actual import costs, which could be checked against invoices and Customs records.

Committee chairman Dr. Harsha de Silva argued that an independent regulator was needed to assess costs and ensure fair treatment of companies operating in the fuel market.