In his statement, the MP claims that (a) the Ceylon Petroleum Corporation (CPC) is incurring specific losses on the sale of each litre of Petrol, Diesel, and Kerosene, and (b) these daily losses could be minimized if the levies currently imposed are removed.
FactCheck.lk evaluated the losses incurred by making the best estimates in relation to the fuel price formula implemented by the Ministry of Finance (MoF) in 2018 (see Exhibit 2) 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.
To check the first claim on the loss to the CPC in the sale of a litre of 92-Octane Petrol and Auto Diesel, FactCheck.lk estimated the cost to the CPC by using average Singapore petrol and diesel prices from 7 to 11 February (see Exhibit 3). Exhibit 1 shows the various costs in terms of the MP’s estimates (as imputed) and estimates by FactCheck.lk. Based on the numbers estimated by FactCheck.lk there is a loss of LKR 19 for petrol and LKR 46 for diesel. The larger losses for diesel claimed by the MP, point to the pre-tax price estimation error of under 5%.
To check the second claim on the daily loss to the CPC, FactCheck.lk used the average monthly sales number reported in the last three months in 2021. Accordingly, the CPC incurred a loss of LKR 294 million per day on the sale of 92-Octane Petrol and Auto Diesel. Levies on these items were estimated as LKR 207 million per day using the current tax rates. Therefore, the MP is right that CPC would still make a loss (of about LKR 87 million), but this loss it would be more reduced loss if the levies are removed.
The minister is right on both the loss incurred by the CPC on the sale of one litre 92-Octane Petrol and Auto Diesel, and on the CPC being able to minimize/reduce its daily losses with the removal of levies imposed on these petroleum products.
Therefore, we classify this 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.
NB: In this factcheck landed, processing, administrative costs are assumed to be based on the 2018 numbers and methodology. Hence, it is likely the aforementioned costs would have slightly changed in 2022.
The CBSL in its daily economic indicators only reports the price of Singapore petrol and Singapore diesel and do not report the prices of variants (i.e., Petrol 92 Octane, Petrol 95 Octane, Auto Diesel, and Super Diesel). Therefore, it was not possible for FactCheck.lk to assess all the numbers claimed by the MP. Further, 95 Octane Petrol and Super diesel combined only accounts for 6% of the total petrol and diesel consumption in Sri Lanka for 2020.
Central Bank of Sri Lanka, Daily Economic Indicators (07 Feb 2022 to 11 Feb 2022), available at https://www.cbsl.gov.lk/en/statistics/economic-indicators/daily-indicators [last accessed: 02 March 2022]
Central Bank of Sri Lanka, Monthly Economic Indicators ( November 2021 to January 2022), available at https://www.cbsl.gov.lk/en/statistics/economic-indicators/ monthly-indicators [last accessed: 02 March 2022]
Central Bank of Sri Lanka, Indicative US Dollar SPOT Exchange Rate (LKR per 1 USD), available at https://www.cbsl.gov.lk/rates-and-indicators/exchange-rates/daily-indicative-usd-spot-exchange-rates [last accessed: 02 March 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]
Sri Lanka Customs, Customs Import Tariff – 2022, available at https://www.customs.gov.lk/customs-tariff/import-tariff/ [last accessed: 02 March 2022]
Ministry of Finance, General waiver of customs import duty (24 March 2021) available at https://treasury.gov.lk/api/file/95bfd5ef-e255-4310-a437-0b23bea9e284 [last accessed: 02 March 2022]
Ceylon Petroleum Corporation, Historical Prices, https://ceypetco.gov.lk/historical-prices/ [last accessed: 02 March 2022]