Sri Lanka: Dispute over gas price creates shortage
By KRISHAN FRANCIS,Associated Press Writer AP - 2 hours 28 minutes ago
COLOMBO, Sri Lanka - The Sri Lankan government ignored a Supreme Court order to reduce state-set gas prices, declaring Friday that soaring fuel prices would remain unchanged.
The standoff between the court and the government has created an artificial fuel shortage and long lines at the pump.
Many filling stations, unsure what price to charge, did not fill tanks Thursday, fearing they would end up buying gas at the higher price and be forced to sell it at the court-ordered discount. Stations across Colombo ran out of fuel, and lines stretched into the streets for those that had some left.
The government, expecting oil prices to continue climbing, agreed earlier this year to buy all of its fuel at the price of $134 a barrel until next summer. In recent months, however, the price of oil has plummeted to under $50 a barrel.
A recent document submitted in court estimated the deal could cost as much as $775 million, economist Harsha de Silva said.
With oil prices plunging, the Supreme Court ordered the government Wednesday to immediately reduce the state-set price of gas from 122 rupees to 100 rupees (about $1).
But instead, the court's efforts have created a black market that sent the price in some places skyrocketing to 145 rupees a liter.
The government ignored the order, with Trade and Consumer Affairs Minister Bandula Gunawardena saying the Cabinet can't act because it never received an official copy of the court order. The court has said it delivered the ruling to the appropriate government officials.
Chandana Alutge, a university teacher, said he stopped driving his car because of the shortage.
"This is not good for the country," he said.
The opposition United National Party claimed the government won't reduce the gas prices so it can use the extra profits to cover the losses from the oil hedge.
The court has made no comment on the dispute.
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