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Sri Lanka's CPC to make Rs10bn in profits in 2014: minister
26 Jun, 2014 18:28:32
June 26, 2014 (LBO) - Sri Lanka's state-run Ceylon Petroleum Corporation said it was on track to make between 8 to 10 billion rupees in profits in 2014, after narrowing losses in 2013, a minister said.
Petroleum minister Anura Yapa said CPC had made a 2.1 billion rupee operational profit in the first four months of 2014. In 2013 the utility narrowed losses to 7,984 million rupees from a 97,308 million loss in 2012. Minister Yapa said the utility was on track to make 8 to 10 billion rupees in profits unless prices escalate.

Already recent troubles in Iraq had sent oil prices up by about a dollar a barrel, he said.

Sri Lanka does not market price fuel daily unlike in low inflation countries and the elected ruling class has typically manipulated energy prices generating macro-economic instability.

When ruling administrations try to raise prices, other sections of the elected ruling class oppose such moves.

Sri Lanka's state run energy utilities typically trigger balance of payments crises and inflation in Sri Lanka by selling imported energy below cost and financing the gap with bank credit which are ultimately accommodated by central bank credit (printed money).

When the energy utilities make profits, the domestic currency is strong and inflation low.

Huge losses and unpaid dues to the petroleum utility triggered sent the rupee plunging to 130 to the US dollar from 110 in 2012.

Analysts say Sri Lanka's population is easy to deceive since there is a strong belief in neo-Mercantilism cost-push inflation theory even among the intelligentsia, where diesel in particular is thought to be the prime cause of price rises, rather than monetary policy.

As a result even now diesel - the most expensive fuel to import after kerosene and now known to be carcinogenic- is sold below the price of petrol, the cheapest fuel.

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