The Ceylon Petroleum Corporation (CPC) is considering a fuel price increase after the three foreign companies in retail fuel distribution scaled back their operations, CPC Chairman D.J. Rajakaruna said on Thursday.
Lanka Indian Oil Company (LIOC), Sinopec and RM Parks have limited their activities as global fuel prices have risen, leaving the state-owned CPC to cover the shortfall, Rajakaruna said.
He said the three companies together accounted for 45 percent of the fuel distributed in the country. With their operations reduced, the CPC now distributes 80 percent of the country’s diesel through its own network of filling stations.
Rajakaruna said diesel prices in the global market had risen to US$174 a barrel and petrol prices to US$133 a barrel by Tuesday, after climbing within a matter of days.
Asked whether the corporation would act to discourage fuel use further, he said a price increase would be the best option. He said the CPC could not tighten the QR code rationing system because doing so would involve substantial administrative costs.
“A price hike is being considered as a result,” he said. He also said the corporation would face constraints because of how quickly world prices had moved.
Background
The CPC is the state-owned company that imports, refines and sells petroleum products in Sri Lanka. LIOC, a Sri Lankan subsidiary of Indian Oil Corporation, has operated filling stations alongside the CPC for many years. Sinopec and RM Parks entered the retail market more recently, which widened the number of fuel suppliers available to motorists.
The QR code system Rajakaruna referred to is the National Fuel Pass, which the government introduced during the 2022 fuel shortages to limit the weekly quantity each vehicle could buy. The scheme was later relaxed as supplies improved.
The CPC’s remarks come in the same week that the country recovered from a nationwide power failure. The National System Operator (NSO) ended power cuts on Thursday after Unit 2 of the Lakvijaya Power Station at Norochcholai returned to service, following the island-wide blackout of Saturday, 17 October. The Public Utilities Commission of Sri Lanka had approved one-hour rotational power cuts on three days, from 19 to 21 October, if they were required.
What it means
If the CPC raises prices, motorists, bus operators and transport companies would be the first to feel the change, because diesel and petrol are used across public and goods transport. The corporation has not announced a new price or a date for any revision.
The fact that the CPC now supplies most of the diesel sold also means that its own stock levels and import schedule matter more for filling stations than before. Rajakaruna did not say whether any station had run short of fuel.
Fuel prices in Sri Lanka are normally revised through the CPC’s pricing process. Readers can follow any announcement through the CPC and the Ministry of Energy.
