The Ceylon Petroleum Corporation (CPC) incurs a loss of more than Rs.30 billion annually as a result of selling furnace oil at subsidized rates for electricity generation, the Petroleum Industries Ministry said yesterday. Minister Susil Premajayantha said the CPC sold a litre of furnace oil, which cost Rs.60 to the Ceylon Electricity Board (CEB) for Rs.25 and to the private sector for Rs.26 per litre for thermal power generation.
“The losses caused by the price difference have to be borne by the treasury. As such we must begin to focus on diversifying our sources of supply for power generation,” the Minister said when addressing stakeholders of the local lubricant industry.
Although the lubricant industry market was liberalized in 2006, a regulatory body has not been established for either the petroleum industry or the lubricant industry.
Petroleum Ministry Secretary Titus Jayawardene said in the absence of a regulatory body, the Petroleum Industry Act and the Petroleum Products Act would be amended soon.
“We have received cabinet approval for the amendments. Once they are passed in parliament, the Public Utilities Commission (PUC) will function as the regulatory body for business activity in the petroleum industry,” PUC Chairman Jayatissa De Costa said.
The minister said the local lubricant industry had a turnover of some 45,000 kilo litres worth six billion rupees annually.