MANGALA REVEALS FUEL PRICE FORMULA
Finance Minister Mangala Samaraweera yesterday revealed the fuel price formula finally after lobbying by opposition parties and questioning by the media for four months since its inception.
“I promised to reveal the price formula some time back. this is a simple one.it is MRP= V1+V2+V3=MRP ( maximum retail price). this is what we used as the fuel price formula.” the Minister told a media briefing last afternoon.
“The maximum retail price is computed using four components namely the landed cost, processing costs, administrative costs and taxation.v1 is landed costs per litre which includes Singapore Platts price per barrel, weighted average premium per barrel, loss due to the evaporation and exchange rates are applied in accordance with this component. V2 is processing costs which involve local port charges, transport costs, dealer’s margin including losses due to evaporation to dealers and stockholding cost per litre. V3 involves administrative expenses including personnel cost, depreciation and other costs elements per litre. V4 includes customs import duty, excise duty, ports and airports development levy and nation building tax per litre.this is the fuel price formula which the government had adopted,” the Minister said.
Citing an example he said the price of a litre of petrol as at October 10, 2018 was Rs. 157.22. This was computed by adding landed cost of Rs 93.84, processing cost Rs 5.87, administrative cost Rs 3.83 and taxation Rs 53.68. Accordingly the price of a litre of petrol as at Ocrober 10 2018 was Rs 157.22.
It was explained that Singapore platts price and exchange rates are uncontrollable variables. Others are either fixed or controllable variables.