The minister, in his tweet, claims that the recent price revisions to fuel (see Exhibit 1) reflect a formula that incorporates all relevant costs. Thus, the minister suggests that petrol and diesel are no longer sold at a loss.
The fuel price formula designed by the Ministry of Finance (MoF) in 2018 generates the price that fully recovers all the costs of Ceylon Petroleum Corporation (CPC), including the taxes that are paid to the government. FactCheck.lk evaluated this claim in relation to the fuel price formula and other data published by the Central Bank of Sri Lanka (CBSL). As the data available was limited to 92 Octane Petrol and Auto Diesel FactCheck.lk limited its evaluation to these items.
On average for the month of May (up to 24 May), the Singapore Platts price was USD 139.9 per barrel for petrol and USD 142.4 per barrel for diesel. The average selling exchange rate of a USD was 358.8. Using these figures as inputs, FactCheck.lk estimated the formula price (which will ensure no loss) to be LKR 413 and LKR 385 per litre of petrol and diesel, respectively.
The formula price calculated on a monthly basis is published at: https://dashboards.publicfinance.lk/fuel-price-tracker/?utm_source=twitter&utm_medium=twitter&utm_campaign=Fuel%20dashboard
Prior to 24 May 2022 CPC sold petrol at price less than cost (inclusive of taxes). Diesel was sold at price less than cost (both inclusive and excluding taxes). These prices are illustrated in Exhibit 2, where the market price was less than the formula price. However, it shows that with the adjustment of the petrol and diesel prices the market price has caught up with the formula price.
Therefore, we classify his statement as TRUE.
*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.
Exhibit 1: Recent fuel price revisions
Exhibit 2: Market price and formula price with and without taxes from Jan 2022 to May 2022
Source: Ministry of Finance Formula, Publicfinance.lk
NB: The months refer to the end of the month numbers except for the month of May, which is up to 24 May 2022. Further, an error margin of 3% would be tolerable to account for noise in the cost estimation formula.
Fuel Price Tracker Formula available at https://publicfinance.lk/en/topics/fuel-price-tracker-1653909188 [Last accessed 1 June 2022]
Daily Economic Indicators of the Central Bank of Sri Lanka available at https://www.cbsl.gov.lk/en/statistics/economic-indicators/daily-indicators [last accessed 1 June 2022].
Ministry of Finance, Press release (31 December 2018), available at http://www.treasury.gov.lk/web/guest/article/-/article-viewer-portlet/render/view/retail-prices-of-auto-fuels-as-at-december-19-2018-as-per-fuel-pricing-mechanism [last accessed: 24 March 2020]
Ministry of Finance, Press release (16 October 2018), available at www.treasury.gov.lk/documents/10181/606187/PRESS+RELEASE+-+Fuel+Formula20181016/acd8b96e-fae4-46b5-ae30-25086e16134e?version=1.0 [last accessed: 24 March 2020]