The Industrial Association of Sri Lanka (IASL) and the Sri Lanka Ceramics & Glass Council are repeating requests for a reduction in furnace oil prices to a minimum Rs.50-55 (US$0.38-0.41).
The associations want the reduction in price in order to ease the current burden of prohibitively high costs of production.
“We made representations to the previous Government and we are now making the same representations to the new regime”, stated Piramal Glass Ceylon PLC CEO Sanjay Tiwari.
“Ever since the last price increase our margins have been severely eroded and we find it very difficult to compete with countries like India, which almost immediately converted the benefit of reduced petroleum prices to a reduction in furnace oil prices,”
Approximately 40% of production costs in the glass and ceramic industry are generated by energy costs, and Piramal Glass reportedly consumes approximately 30,000 litres of furnace oil per day.
The previous Government increased the price of furnace oil from Rs.40 per litre in April 2011 to Rs.90 per litre in February 2012, when international oil prices peaked at $120 per barrel.
Since then furnace oil prices have remained static in Sri Lanka despite significant reductions of almost 60% in international oil prices, which currently hover between $50-55 per barrel.
When questioned about a potential reduction in furnace oil prices, Secretary to the Treasury, Dr. R.H.S. Samaratunga had recently stated that his primary concern would be with regard to how such a reduction could take place without adversely impacting the Ceylon Petroleum Corporation.
Tiwari reiterated that his industry was being forced to incur a heavy burden of Rs.80 per litre of furnace oil when competitors internationally were enjoying prices of approximately Rs.46 per litre.