Fuel pricing formula revealed

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.

Sri Lanka Fuel Pricing Formula (Sinhala & English) 18-10-2018 by Anonymous 4xL1hr21yl on Scribd