Govt Considers Fuel Price Revision or Subsidy as Retailers Suffer Heavy Losses

The Sri Lankan government is currently weighing options to either revise domestic fuel prices or introduce a government-funded subsidy to resolve recent supply disruptions and compensate fuel distribution companies facing severe operating losses, Ceylon Petroleum Corporation (CPC) Chairman D. J. Rajakaruna stated.

Addressing a press briefing on recent fuel shortages reported at several filling stations island-wide, Rajakaruna clarified that supply gaps were largely triggered by private distribution companies cutting back on market releases due to mounting financial losses.

The CPC chief noted that officials summoned representatives from all registered fuel marketing companies last week to address the situation. During the meeting, suppliers presented detailed figures on their current per-liter losses:

Sinopec: Losing Rs. 192 per liter of diesel and Rs. 67 per liter of petrol.

RM Parks (Pvt) Ltd: Incurring losses of Rs. 173 per liter of diesel and Rs. 38.75 per liter of petrol.

Lanka IOC: Reporting losses of Rs. 136 per liter of diesel and Rs. 57 per liter of petrol.

Rajakaruna pointed out that while the CPC holds a national mandate to maintain essential fuel supplies regardless of cost, non-state operators run purely commercial operations and cannot sustain sales at a deficit. He added that existing agreements with these suppliers bind the government to compensate them for losses incurred whenever state-mandated maximum retail prices fall below cost recovery levels.

To restore stability to the market, authorities are now actively discussing two possible pathways: granting approval for companies to adjust retail prices to cost-reflective levels, or providing direct government intervention through fuel subsidies.