Sri Lankan government’s move to reduce fuel prices results in overall reduction in transport costs
The government of Sri Lanka has reportedly stated that bus fares which were raised by state regulation three times this year have come down by 6 percent after a fuel prices were cut by 17.9 percent.
However, the minimum bus fare has recorded a 33 percent increase over the year.
Since May when fuel prices were raised by a formula, bus fares were raised twice amid allegations that a part of the price increase was politically motivated.
Nevertheless, since the introduction of the monthly fuel price formula, Lanka Auto Diesel has fallen from a peak of Rs. 123 a litre to 101 rupees or 17.9 percent.
According to reports, the National Transport Commission (NTC) which regulates prices cut the price of fares by about 4.2 percent.With the latest price cut, diesel prices are up 6.3 percent after a fuel pricing formula was started in May, from Rs. 95 to Rs. 101 a litre while fares are up an average of 17 percent.But the minimum fare is up from Rs. 9 to Rs. 12 or 33 percent.
Three wheeler prices although not regulated by the state and are subject to free market competition have made individual moves to reduce taxi fares in order to remain a competitive mode of transport.
OSL take:
The decline in the overall transport costs in Sri Lanka in line with the reduction of fuel prices by the government is an encouraging sign for businesses in the island nation. The reduction in transport costs will have positive results on businesses in every sector. While helping improve profits earned by businesses, the reduction in overall manufacturing costs will make locally manufactured products competitive in the foreign markets. Given the ongoing trends in Sri Lanka, the island nation provides an ideal venue for foreign establishments to set up business bases.
| Article Code : | VBS/AT/02012019/Z_3 |