SJB unionist: IOC and Sinopec benefit from special levy on fuel to recover CPC losses

By Shamindra Ferdinando

Even after imposing 18 percent Value Added Tax (VAT) on fuel with effect from January 1, the government continued to charge Rs 50 on a litre of both petrol and diesel purportedly to recover losses incurred by the highly corrupt state owned Ceylon Petroleum Corporation (CPC) over the years, Samagi Jana Balawegaya trade union leader Ananda Palitha told The Island yesterday (01).

The CPC owed the public an explanation why those who had been struggling to make ends meet were forced to pay for losses caused by waste, corruption, irregularities and mismanagement at all levels at the government managed entity, the former UNP activist said.

According to Ananda Palitha, the government introduced Rs 50 charge on each litre of petrol or diesel sold with effect from June 01, 2023 due to accumulated government-guaranteed debt of nearly USD 3 bn owed by the CPC to the Bank of Ceylon and People’s Bank transferred to the Treasury in line with a Cabinet decision.

Palitha pointed out that two private enterprises, namely Lanka Indian Oil Company (LIOC) and Chinese giant Sinopec, had been the main beneficiaries of the controversial levy.

The trade unionist took up this issue in the wake of the new pricing formula announced at midnight on January 1.

The CPC and LIOC increased the price of a litre of petrol 92 by Rs 20 to Rs 366 whereas Sinopec priced the litre at Rs 363. The CPC and LIOC increased the price of litre of auto diesel by Rs 29 to Rs 358 while Sinopec priced the litre at Rs 355. The CPC, LIOC and Sinopec priced petrol 95 and super diesel at Rs 464 and Rs 475, respectively, having increased the price of litre by Rs 38 and Rs 41. A litre of kerosene has been reduced by Rs 11 to be priced at Rs 236.

Contrary to various reports regarding the new pricing formula, the government imposed 18 percent VAT after having abolished 7.5 percent Port and Airport Development Levy aka PAL but retained the unprecedented Rs 50 charge on a litre of diesel and petrol.

Ananda Palitha alleged that the Cabinet approved original plan to levy 1% tax on monthly sales of new entrants to the domestic fuel market, namely Chinese oil giant Sinopec, US-based R.M. Parks and United Petroleum of Australia was reversed and a special charge of Rs. 50 imposed on hapless consumers. The US and Australia-based firms are yet to launch operations here.

One percent tax was to be utilized to settle USD 3 billion loans taken by the CPC but following representations made by Sinopec, the government abolished 1% tax on their sales, Ananda Palitha said, urging the Opposition to examine the issue at hand without further delay.

Responding to another query, the political activist found fault with the Parliament for not looking into the pricing formula, regardless of the media relentlessly taking up the issue. The Opposition, too, had been largely silent while the government allowed Indian and Chinese state companies to make a killing, the SJB trade union leader alleged. “We are contemplating lodging a complaint with the Commission to Investigate Allegations of Bribery or Corruption. Can a bankrupt country allow foreign companies to make such huge profits at the expense of the public?” Ananda Palitha asked.

The government repeatedly assured that the entry of foreign players would stabilize the local market and ensure uninterrupted supply, Ananda Palitha said. “We were told of competitive pricing formulas and quality products at affordable prices. But, the foreign players are now making unconscionable profits with the blessings of the government,” the activist said.