Sri Lanka cuts petrol price after court order

December 17th, 2008 - 6:31 pm ICT by IANS  

Colombo, Dec 17 (IANS) Sri Lanka on Wednesday reduced the price of petrol by over 18 percent following an order from the Supreme Court, which heard a public interest case filed by a Buddhist monk and an opposition legislator.Chief Justice Sarath N. Silva Wednesday accepted a price reduction formula put out by the country’s treasury that will bring down a litre of petrol from Rs.122 to Rs.100 from midnight Wednesday.

The apex court order for a price reduction formula followed a petition that the state-run Ceylon Petroleum Corp (CPC) was not reducing retail prices because it had hedged oil imports at $130 a barrel in June and therefore was unable to take advantage of falling international prices.

Last month, the court suspended nearly $400 million in payments to three foreign banks over the hedging deal, and ordered a shake-up in the petroleum import business run by the government.

The court sacked CPC chairman Asantha de Mel, who had virtually bet that oil prices will be higher than $130 dollars a barrel till August next year.

Buddhist monk Ven. Thiniyawala Palitha Thero and United National Party leader Ravi Karunanayake in their petition had asked the Supreme Court to intervene and stop the deal saying that with sharp falls in the international oil market, Sri Lanka was losing heavily.

In their petition, they argued that Sri Lanka had not fully passed on the drop in prices to consumers because the country still pays at the rate of $130 dollars a barrel while international prices have fallen below $45.

The Supreme Court has already halted hedging payments to Standard Chartered Bank Plc, Citibank Plc and Deutsche Bank AG, while two local banks also saw payments to them suspended till the case is taken up again next February.

Annually, Sri Lanka consumes about four million tonnes of fuel products for various purposes. The island nation depends entirely on imports for its fuel product supplies.

On an average, the CPC sells nearly 45 million litres of petrol and 170 million litres of diesel, while Lanka IOC Ltd (LIOC) sells 15 million litres of petrol and 30 million litres of diesel in Sri Lanka per month.

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