Thoughts on fuel prices, three wheelers and Mahinda Chinthana
Posted by Ajith on January 15, 2008
According to Lanka Business Online (LBO), government has raised fuel prices from midnight Sunday with petrol going up by 10 rupees, diesel 5 rupees and kerosene 2 rupees. This makes the price of 90-octane petrol Rs. 127; auto diesel Rs. 80.00, super diesel Rs. 85.30 and kerosene Rs. 70.
This is not the first time in the near past the fuel prices took a swift elevation. Now it is almost a bi-monthly event. As usual, the classic reason given is the change in the crude oil prices in the world market.
Interestingly, this price hike comes at a time the worldwide crude oil prices were actually plummeting. Price of a barrel rose to US$ 100 at the beginning of year momentarily, but since then it was falling. An AP report says now the oil prices are steady around US$ 92 a barrel –lower than Nov 2008 values. So crude oil prices can no more be an excuse – at least for the recent price hike. One might also question what component of the petrol/diesel prices actually depends upon the crude oil prices and what constitute the different tax components, which have nothing to do with crude oil.
Budget speech 2008, itself referred to the high fuel prices and the hardships public may undergo by the same. This was what President Rajapakse, as the Minister of Finance said:
Honourable Speaker, the price of crude oil has now exceeded US$ 95 per barrel. As such, the need to adjust fuel prices has surfaced again. However, since any revision of diesel and kerosene price would cause hardship to the public, I am considering to refrain from revising such prices at least as a temporary measure…If international price of crude oil remains continuously high, we have no choice but to face the hard reality. However, the price of kerosene will be maintained at the current level and provision has already been made to extend a Rs. 100/- kerosene subsidy per month to Samurdhi and other low income households who do not have electricity. It is proposed to give limited quantity of petrol at a discounted price to three wheelers with meters and also to introduce a loan scheme to enable the purchase of such meters. (Budget speech, 2008)
Did the international price of crude oil remained high? No it is US$ 92 now, lower than what it was when the budget speech was written. So why a hike? Shouldn’t we see a drop?
Then how can one forget what Mahinda Chinthana said about controlling the fuel prices and there by relieving the burden of the people?
Political and other interferences have created immense problems in our energy sector. I aim at relieving our poor and the country’s economy of the impact of increasing energy prices in the world market, and at improving the energy supply to match the demand within the country. (Mahinda Chinthana, English Version, page 60)
So one would really wonder what relief a price hike of petrol, diesel and kerosene would bring to poor people, without providing any cushions they were promised in the pre-election period.
LBO also notes that the type of price increase would have more impact on the poor than rich. This is because of the subsidy provided for diesel consumers overpricing the petrol. Nothing can be far from the truth than assuming it is the rich who consumes petrol, while poor consumes diesel. For example what type of fuel the three-wheelerers use? Does anyone think the three wheelerers too a group of rich businessmen who should pay more so that the ‘poor’ company chairmen who uses diesel cars should not be affected by high prices of diesel?
Again this is what Mahinda Chinthana promised to three wheelerers:
I will prepare a plan, with stake-holder consensus, to provide fuel at concessionary rates to public transport services such as trains, buses and three-wheelers. The services rendered by the three-wheelers in the national transport system will be appraised, and an action plan will be developed to alleviate the problems faced by them. (Mahinda Chinthana, English Version, pages 63-64)
The million rupee question is how long the poor three wheelerers have to wait till the promises given to them materialize. Will that ever happen in near future? Or will they too be conveniently forgotten like most of the typical election promises of our times?