President Anura Kumara Dissanayake today provided a clarification on domestic fuel prices in light of rising crude oil prices in the global market and subsequent fuel price increases in other countries, triggered by the ongoing crisis in the Middle East.
The President highlighted that the Ceylon Petroleum Corporation (CPC) currently supplies 57% of the country’s fuel requirements, while the remaining 43% is supplied by the private sector.
He further noted that private sector suppliers have requested pricing that reflects current global market rates for the fuel they import.
Accordingly, the President emphasized that a decisive decision on fuel price adjustments must be reached as expeditiously as possible to ensure the continuity of the national fuel supply.
Addressing the Parliament, the President stated that the current pricing formula dictates that for every one-dollar increase in global oil prices, domestic fuel prices must rise by Rs. 2.
He noted that the primary impact being faced is driven by the surge in global fuel prices rather than the depreciation of the rupee against the US dollar.
The President said that, globally, countries have been compelled to make difficult decisions regarding fuel costs, with price increases ranging from approximately 6% to 50%.
He added that while global prices have risen by as much as 49%, the domestic increase has been limited to 8%.
He further stated that Sri Lanka is currently facing a significant challenge in maintaining fuel supply.
The Ceylon Petroleum Corporation (CPC) accounts for 57% of the country’s fuel supply. He noted that had the CPC been the sole supplier, fluctuations could have been managed by offsetting current losses with future profits.
However, he said the private sector now controls 43% of the market, and their position is that if retail prices do not reflect the current landed cost of fuel, they will cease imports.
He added that, from a business perspective, this is a valid concern, as private companies reportedly incur a loss of approximately USD 55 million per shipment, which he said is unsustainable.
The President emphasized that the contribution of the private sector is essential to maintaining the national fuel supply, but noted that they will only participate if they are able to sell at cost-reflective prices.
He stressed that the issue of fuel pricing must therefore be addressed urgently.
He also pointed out that under the existing Act, companies are permitted to increase prices; however, the maximum retail price is determined by the Ceylon Petroleum Corporation.
“Although we have entered into agreements with these private companies, the necessary legislative amendments to the Act have not yet been finalized,” he noted.
Regarding government revenue, the President stated that tax income from fuel currently stands at Rs. 20 billion, compared to Rs. 240 billion generated last year from taxes on diesel.
