The Hon. (Prof.) Anil Jayantha - Minister of Labour and Deputy Minister of Economic Development

¶ 01 Mr. Speaker, I will state the Government’s position. When there is a queue at a petrol shed, a social perception forms of a fuel shortage. This is not a fuel stock issue. There is a history. When pricing fuel, a profit margin is added to the cost of production. At import, at the port, and with transport, various taxes are levied; then the 3% margin was applied on that tax-included base. Although that 3% existed, since fuel prices were not that high earlier, it did not cause much debate. As prices rose, the CPC took note. In 2019, they calculated and set boundaries: a cap at Rs. 162 on the commissionable base, and a lower floor (around Rs. 100), allowing movement within those. For example, if Rs. 162 is set, commission is capped accordingly. However, due to some reason—perhaps political or other interference—this was neither implemented nor communicated to dealers. In 2022, with rising prices, CPC informed dealers; objections arose. The National Audit Office also examined and found a significant loss to CPC because dealers were earning a margin on the tax component. The Audit found that when the cap is Rs. 162, the commission should be about Rs. 8.86 per litre, but in practice Rs. 9 to Rs. 10.50 was being paid.

¶ 02 When CPC moved to implement, dealers sought an injunction. CPC indicated further study. While the case proceeded, in August 2024, the Court of Appeal cleared that the earlier undertaking was no longer valid. However, CPC still did not implement. After our Government took office, we decided to correct this. On 25 February, we notified the new calculation. On 28 February, when the Court of Appeal called the matter, dealers did not object or make submissions; thus we have authority to implement.

¶ 03 Meanwhile, in the last 2–3 days, dealers continued to place orders. Normally we get 1,100–1,200 orders per day; in recent days, even more orders came. A small group appears to have decided unilaterally not to distribute, while creating panic via social media. We see this as action by a small group. Under the CPC formula, the margin adjusted from 3% to 1.5% on the tax-free base in some cases still yields a fair return. There are different load scenarios (15, 30, 60, 90, 120 loads), with margins ensuring approximately 3.5% profit on average; in remote areas with higher distribution costs, an additional Rs. 8.45 per litre allowance applies beyond 15 km, translating to about 4.5%. Therefore, no unfair reduction occurs. We request the market not to create unnecessary panic. The Government will ensure this essential commodity is supplied.