Fuel Pricing Formula...
October 18, 2018
Sri Lanka’s much-talked about Fuel Pricing Formula was revealed in detail to the media by Minister of Finance and Mass Media Mangala Samaraweera, at a press conference in Colombo today (18).
The Cabinet of Minister had granted approval for the implementation of a cost reflective formula based pricing system of auto fuels effective from May 11, 2018.
The pricing formula was constructed by a technical committee based on the following components of the supply of auto fuels:
- Landed Cost
- Processing Cost
- Administrative Cost
- Taxation
Accordingly, the Maximum Retail Price (MRP) of the auto fuels was established as follows:
MRP = V1 + V2 + V3 + V4
Where;
V1 - Landed Cost (Rs./Litre)
Which includes Singapore Platts Price per Barrel, Weighted Average Premium per Barrel, Loss due to the Evaporation and Exchange Rates (US$) / LKR applied.
V2 - Processing Cost (Rs./litre)
Which includes Local Port Charges, Transport Cost, Dealer’s Margin including losses due to evaporation to dealers and stockholding cost.
V3 - Administrative Cost (Rs./Litre)
Which includes administrative expenses including personnel cost, depreciation and other cost elements, if any.
V4 - Taxation (Rs./Litre)
Which includes Customs Import Duty, Excise Duty, Ports and Airports Development Levy and Nation Building Tax.
Note: According to the above pricing formula, Singapore Platts per Barrel and Exchange Rate are two uncontrollable variables. Other components are either controllable variables or fixed components.
