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Cost of living on fire

Price hike of 36% in diesel alone triggers price increase across the board in transport and essential food items
The unprecedented hike in diesel and kerosene prices has had a whole gamut of adverse effects on the public, with more to follow in the coming few weeks. The increases have seen a spate of protests by Opposition parties as well as various sectors including the private bus operators, plantation workers and the fishermen. The private bus operators managed to obtain a 20% increase in fares.

The Government on Friday offered concessions to the fisheries sector, three-wheelers, school vans and Samurdhi beneficiaries, but there were complications in the beneficiaries obtaining the benefits. A cross section of the general public, political parties and various other sectors on being interviewed, expressed their views on the increase and its impact.

Reports compiled by a team of reporters from the Sunday Times follows:

The next few weeks will see a series of price hikes in essential goods and services leaving the public burdened with increasing expenses.

Last week’s fuel hike has left vendors and service providers with no options but to pass it on to the public. From bus fares to school van and taxi charges, from essential consumer items like milk powder to vegetables, from a lunch packet to a loaf of bread, all will see a gradual increase.

The devaluation of the rupee has also increased the price of essential food items such as big onions, potatoes and dhal, all consumed daily by low and middle income groups. The wholesale traders were due to meet on Friday to decide on the proposed increases.

On February 12, the price of Lanka Petrol 95-Octane was increased from Rs. 155 to Rs. 167 per litre, Lanka Petrol 90-Octane from Rs. 137 to Rs. 149 and Lanka Auto Diesel from Rs. 84 to Rs. 115.
The fuel increase not only affected the urban population, but also 80% of the country’s rural population who use kerosene. Lanka kerosene went up from Rs. 71 to Rs .106 per litre. A litre of Kerosene was only Rs 51 in 2010.

The fuel increase triggered a number of protests and strikes from fishermen to bus operators, from political parties to the general public. When the Sunday Times spoke to managers of several wholesale and retail shops that sell essential items, most of them were waiting for new stocks to increase the prices.

According to M. Sekar, a Pettah wholesaler in essential dry rations, the announcement of fuel hike has brought in an increase in customers.

“People fearing a big price increase, especially in items such as milk powder, are buying stocks. Last October, when fuel prices went up, we had to increase the prices of goods, now again there will be a price revision,” he said.

Jayantha, a retailer in Colombo for about 25 years, said most retailers are hoping to increase gradually, to cushion the impact of the burden on the public. “Dhal, sugar, onions, potatoes, milk powder, green gram are some of the products that will see an increase,” he said.

Meanwhile, vegetable sellers are also predicting a price hike next week, with the increase in transport cost. Another hit to the working class is the increase in the average packet of rice and curry. Some vendors have already increased the price by Rs 10, while others will increase in the coming weeks.
“We are reluctant to raise the prices, as we did towards the end of last year, when a fuel hike was imposed. But the transport cost and the price increase in products like dhal, onions, vegetables and fish is too much to overlook,” said a lunch packet vendor on Galle Road.

President- Bakery Owner’s Association, Jayawardene said the association has requested Minister Jhonston Fernando for a meeting regarding the increase of bread price by a minimum of Rs 3.
“We have to definitely increase the price of a loaf of bread. The operational costs are increasing and members of the association are pressurising us to announce a minimum increase of Rs 3 up to a maximum of Rs 6. We have requested a meeting with the minister, but have not been given a date,” he said.

However, the Sunday Times learns that some of the bakeries have already increased the prices of their bakery products by two-three Rupees.

Transport cost on overdrive with 40% Diesel price hike

The transport sector has had one of the biggest impacts from the fuel price increase with increase in bus fares and transport charges for office and school van services, with immediate effect. Friday’s announcement for concessions to three-wheelers and school vans had little or no impact on the revised prices.

The minimum bus fare has already been increased to Rs 9, and the other charges increasing by 20%, while van fees were being revised by large margins with increases of 35%. Metered taxi operators claimed that their rates are lower than the non-metered three-wheeler rates and hence, at a bigger disadvantage. Consequently, the private metered taxi companies announced that they would increase fares by a minimum of Rs 2, while the others have increased their rates beyond that.

“We have no faith in the concessions offered, as the maximum we will get is Rs 750 per month. In order to collect that money, we will have to go through a process which may cost us more than Rs 2,000 by way of loss in working hours”, three-wheeler operater Wickramapala Subasinghe of Grandpass said.
He said that the concession offered was a reduction of Rs 10 for a maximum of three liters per day, and for a maximum of 25 days.

“We obviously use much more than that amount of fuel, and Rs, 30 will not mean anything to us,” he added.Ruwan Senadeera from Wattala said that it is likely that they will be told to register with some authority after getting a letter from the Grama Sevaka, and it would take several days for them to register. “Eventually, the administrative cost to give this relief to us will be so complicated, time consuming and could even lead to corruption and an eventual loss.

“Isn’t it better that the overall prices are reduced by a certain percentage, without making things complicated”, he added. School and office van services have already increased prices

A van service operating from Wattala to Colombo, increased its charges by Rs 700 per person- Rs 3,300 to Rs 4,000, while another van service which operates from Hanwella to Fort, increased its charges by Rs 2,000 per passenger- Rs 4,000 to Rs 6,000.

Meanwhile, a 40% increase in the price of Diesel has seen a higher demand for Petrol vehicles, according to car sales dealers. Site administrator-, Nishantha Rubasinghe said that, with the increase in the diesel price by Rs 31, the demand for Petrol and Hybrid vehicles have risen. He also added that there is a decrease in the overall vehicle sales.

Fuel price hike the highest in years and also in the region

A Sunday Times study shows that fuel prices in Sri Lanka are the highest in the region although the government recently claimed that prices here were the lowest in the region. Here are the prices of a litre of petrol in Sri Lankan rupees in regional countries: India Rs 153, Pakistan Rs. 141, Malaysia Rs. 58, Indonesia Rs. 59, Nepal Rs. 167, and the Maldives Rs. 114.

Diesel and kerosene saw the highest increase in many years. In 2010, the price of a litre of diesel was increased from Rs. 73 to Rs. 76 and to Rs. 84 in 2011. Last week’s price increase by Rs. 31 made the price of a litre of diesel Rs. 115.

The price of a litre of kerosene rose to Rs. 51 in 2010. In early 2011, it went up by Rs. 10 and by another Rs. 10 in a second price hike within a year. Last week, the government increased the price of a litre of kerosene from Rs. 71 to Rs. 106. Petrol prices meanwhile went up by Rs. 12 with 95 Octane variety being sold at Rs. 167 a litre and the 90 Octane variety at Rs. 149 a litre.

UNP parliamentarian and economist Harsha de Silva said the recent fuel price increase had hit the people hard. He accused the government of increasing the fuel prices even when global prices fell.
“Global fuel prices fell from US$ 140 to US$ 125 by mid 2011 and to US$ 117 this year. But the Government failed to pass the benefits to the people,” he said.

Mr. Silva said the hedging deal and the failure to obtain payments from State institutions had resulted in huge losses to the Ceylon Petroleum Corporation (CPC). According to him, the artificially low interest rate and failure to realistically adjust the exchange rate have compelled the Government to take drastic measures aimed at narrowing the widening trade deficit.

50% Kerosene price hike fuels discontent, TU agitation within Plantations

Last week’s 50% price hike on kerosene oil has seriously impacted the Plantation sector, with kerosene being the mainstay of their day to day life for heat and energy. A section of the trade unions in that sector launched a token strike on Friday, with claims of 70% participation.

President- Democratic Workers Congress (DWC), Mano Ganesan said the Plantation workers are already facing an issue in their salary structure and will now face a more serious issue with the increase.

“Plantation workers are now faced with a very serious problem with the recent price increase in kerosene oil, which is the most used commodity within the Plantation sector. Kerosene oil is used to light lamps in households with no electricity, to light up fires for cooking over firewood, and also for use in kerosene cookers,” he added.

 “The DWC along with other trade unions such as the Lanka Jathika Estate Workers Union (LJEWU) launched a token strike on Friday within the estate sectors. If there is no response from the Government, we have planned to meet next week and continue with the strike,” he added.

“The kerosene price hike has intensified the struggle of the Plantation workers. Unlike the ordinary people, the Plantation employees are direct victims of the fuel price hike,” Chairman- All Ceylon Estate Workers Union, R. Chandrasekaran said.

“This fuel hike will badly affect the Plantation worker, whose basic salary is Rs.380 per day,” he added.
After the Collective Agreement of 2011, the price of kerosene has been increased thrice, in March and October 2011, by Rs 10 and the recent hike by Rs 35. After the salary revision of the estate workers, the price of kerosene oil has altogether increased by Rs 55. Consequent to the price hike on kerosene, it was said that the workers will be given subsidies, but it is yet to materialise.

General Secretary- LJEWU, K. Velayutham told the Sunday Times that, the Plantation sector is heavily dependent on kerosene oil. “It is not only the kerosene oil price increase that has affected the people, but also the electricity surcharges, even though the entire estate sector does not have electricity. Thos who do have electricity will have to pay 40% increase in their electricity bills,” he added.

Mr. Velayutham also said that the token strike that took place on Friday was successful and around 70% of the workers participated in the strike. Meanwhile, Leader- Ceylon Workers Congress, Minister Muthu Sivalingam said that people use firewood for cooking and seldom used kerosene, as they have electricity.

He further said that these people will use less electricity- less than 30 units, hence, the surcharge hike on electricity bills will not affect them either. “However, there will be subsidies provided for the Plantation workers, like in the other sectors, to overcome their problems,” he added.

Monday blues as buses came to a screeching halt

There were scenes of chaos last Monday as schoolchildren and office workers tried to reach their destinations. By midnight Sunday private bus services, including many owned by the ruling UPFA supporters had pulled out in protest of the fuel price hike leaving only state-run buses and the train service as a mode of public transport.

Some commuters opted to return home after spending more than an hour at bus stands and those who eventually did get to work were more anxious about how they would be getting back home, than putting in a day’s work, the Sunday Times learns.

“We had to allow the staff to leave office around 2 p.m. with little work being done,” a senior government official said. Some private sector offices were also forced to close early resulting in losses.

The army had to be deployed at some bus stands to ensure security as on some routes private bus operators pelted stones at those who attempted to operate services. In Matara at least eight people and in Narahenpita, Colombo about 25 were arrested for obstructing operators.

In some instances the army was seen flagging down buses and loading more passengers into them or ordering them to remain until more passengers arrived. In the evening the army was seen even stopping private vehicles and requesting them to offer lifts to stranded passengers.

S. N. Sanjeewani (22), a beautician working at a Salon in Nugegoda sharing her experiences that day said that all buses were crowded with about 10 people travelling on the footboard of some of the buses. In addition to the hassle there were men who were trying to take undue advantage of an already messy situation. “Every time it is the common worker who suffers the most when there are strikes,” she complained.

Rajika Perera (17), a student in Colombo said she delayed getting back home as the buses were overcrowded. “It’s bad enough to travel during the school rush hour, imagine a bus strike at that time,” she said.

Dharshani Ediriweera (40), a teacher at a government school in Colombo said it was unfair that commuters were inconvenienced so much. “Majority of the people depend on public transport so it is very unfair by them. Now with the increase in bus fares a significant proportion of our salary will also go for the fare,” she said adding that the government should take steps to strengthen the C.T.B service so that the commuters will not be affected by such strikes by private bus operators.

Lalith De Silva (24), a university student said, whenever there is a fuel price increase it is the consumers who have to bear the burden. “I was late for my lectures. Is this the wonder of Asia,” he said.

Price increase is pandemic

The price increase in fuel is having its impact on a wide range of industries and other informal sectors too. Majority of these sectors are looking to increase their prices in order to cope with the sudden price fluctuations on fuel, but some of these industries fear that increases would reduce their turnover.
They said that there are workers in these sectors pleading for pay hikes as well

Works Manager- Ceylon Motor Works, Gamini Sagara says that the increase in fuel prices has had serious repercussions on the vehicle maintenance and repair industry.

“The price boost has ensued an overall cost increase of 70% and the workers are pleading for salary increments” he said. He also added that the customers are now reluctant to bring their vehicles for repairs, since the service charges and the prices of spare parts for vehicles have risen.

Manager Colombo Showroom- Minel Collections (Pvt) Ltd, Ajith Maduwage said that they now have to incur an increased cost of 10% with the rise in fuel prices. He further said that his company- dealers in ceramics and tiles, will now have to increase the prices of their goods to cover the cost.

Chinthaka Wasgunawardana, a senior executive at ACX International (Pvt) Ltd- a leading courier service company, said that the company may have to cut down their costs due to the fuel price increase, since they cannot charge it from the customers. He added that the increased cost due to the increase in prices is 35-45%.

One of the Directors at a leading custom tailoring company said told the Sunday Times that even though the increase in fuel prices have not had a major impact on the tailoring industry yet, a cost increase could be expected in the future. He also said that his company is currently working on methods and solutions to overcome the cost increment.

Laundry Supervisor- Crescent Laundry, Ajith Ranawana said that they now have to spend over Rs 10,000 per day on diesel. “The increase in fuel prices have resulted in increased cost and decreased profit” he said.

He added that it is a hard time for the business, because the profit margin has decreased, and Crescent will not increase prices for the services provided by them, for a price increase will cause loss of customers.

Farmers too were affected by the price increase in fuel, as many of them irrigate their lands using water pumps run on kerosene. Widanapathirana Willam of Dambulla said that, usually, his fuel bill is about Rs 20,000, as they pump water from a well for their cultivation. But now, it was likely to cost them Rs 10,000 more, as kerosene oil price has gone up by about 50%. He said that it was most likely that pesticide prices too will increase.

What Opposition says

UNP MP Joseph M. Perera: Deyata Kirula is an unnecessary waste of resources The fuel hike affects all aspects of the economy, ranging from the fisheries industry to the transport sector. For instance, how can a low-income person , cope with such a steep increase in oil prices?”.

“Conducting an exhibition such as Deyata Kirula, at such a critical time, is an unnecessary waste of resources.”

JVP General Scretary Tilvin Silva: Protests and demonstrations will continue, until burden on society is lightened “Floating the Rupee is one reason for rise in oil prices. We have an economy where debt is high and the people are victims of exorbitant taxation”. “Every strata of our society is affected because of the rise in oil prices” “We will not stop these protests and demonstrations, no matter who objects, until changes are made to lighten the burden on society.”

The LSSP: Record-breaking increase of diesel price, impacts negatively on the people and the economy
“In an unparalleled move, the Government increased fuel prices steeply, claiming that rising oil prices in the international market was the cause. No prior notice of such a move was given, and price increases were at a record high. From the transport sector to power stations, even to the fisheries industry, diesel is the main source of fuel. However, with a record-breaking increase of Rs 31 (40%) for a litre of diesel, it has had negative impact on the people and the economy.

“We the Lanka Sama Samaja Party object to such changes, and ask the Government to take measures to give relief to the people.

“Because of the devaluation of the Rupee, in relation to the U.S. Dollar, the value of the U.S.Dollar has risen to Rs 120, and has come to a point where control over the floating Rupee is almost impossible”.
“With calamities taking place in the international community, such as political issues and public revolts, it is high time the Government intervenes in a positive light to prevent such disasters taking place within our society,” the LSSP said in a news release.

Buck stops with the consumer, as usual

President- Old Moor Street Trader’s Association, P. Sundaram said that wholesale dealers are not much affected, but retailers will definitely pass the transport cost to the public by increasing prices.
As it is the paddy season, rice prices would not go up significantly, but flour prices would increase with the transport cost. Milk powder price too will increase, but the importers have not given the new price yet.
He said that dhal, onions and potato prices will continue to increase in the coming weeks.

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