July 10, 2018 / 4:42 PM / 8 months ago

Sri Lanka's Ceylon Petroleum raises fuel price after reversal

COLOMBO, July 10 (Reuters) - Sri Lankan state-run fuel retailer Ceylon Petroleum Corp (CPC) raised petrol and diesel prices at its fuel stations with effect from Tuesday midnight, the government said, days after it rejected a finance ministry demand for a price hike.

Government spokesman Rajitha Senaratne said CPC will increase the price of diesel by 8.3 percent to 118 rupees ($0.7412) a litre and gasoline by around 5.8 percent to 145 rupees.

The price rise followed a meeting between President Maithripala Sirisena and Finance Minister Mangala Samaraweera, government officials said. Top state officials told Reuters that Sirisena was not in favour of a price hike, though his media unit denied this.

On Friday, the finance ministry, which has the authority to revise prices, raised the prices in line with a new price formula to stem losses at the CPC.

However, hours after the finance ministry announcement, CPC asked its fuel stations to reverse the price hike. CPC gave no reason for its reversal.

Lanka IOC, a subsidiary of Indian Oil Corporation, however, went ahead with the price hike with effect from Friday.

CPC has about two thirds of the island nation’s retail fuel market, while Lanka IOC has the rest.

CPC had been under pressure to raise prices since incurring a loss of 9.9 billion rupees ($64 million) in the first two months of the year due to rising oil prices.

The government cut petrol prices in January 2015 after Sirisena was voted into office. It did not increase prices until May this year, fearing unpopularity among voters.

Under pressure from the International Monetary Fund to boost revenue, Sri Lanka increased excise duty on diesel by 10 rupees to 13 rupees per litre from August last year but asked fuel retailers not to pass on the cost to consumers. ($1 = 159.2000 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Adrian Croft)

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