Sri Lanka's Fuel Import Costs Jump Sixfold, Says President

COLOMBO (News 1st); Sri Lanka is facing a sharp rise in fuel import costs, with expenditure increasing nearly sixfold compared to February, according to President Anura Kumara Dissanayake.

The surge is being driven by the ongoing conflict in the Middle East, which has created new economic pressures for the country.

Speaking at the Nuwara Eliya District Coordination Committee meeting, the President outlined how rapidly the country’s fuel import bill has escalated in recent months.

"Due to the war situation in the Middle East region, we are facing several economic challenges. For example, in February, we spent USD 98 million on fuel imports. In March, it rose to about USD 216 million. In April, it increased to USD 368 million. For May, based on current estimates, we expect the cost to reach USD 522 million. When compared with February, the cost we bear for fuel imports has increased by nearly six times. So, we have had to manage the economy under considerable challenges."

According to the President, the cost of diesel has significantly exceeded the price at which it is sold locally.

"If we look at fuel, according to the Ceylon Petroleum Corporation, the cost of a litre of diesel is now around 720 rupees. However, we provide a litre of diesel at 392 rupees. When supplying it at that price, the government bears a cost of about 100 rupees per litre. This means the Corporation receives about 492 rupees, but even then, it faces significant losses. Those losses must also be addressed."

The President also pointed out that the government has already taken on significant financial liabilities linked to the Petroleum Corporation.

"Due to the lack of proper management in the past, a major loss, about 84 billion rupees, has been taken over by the Treasury, which is now repaying that debt. Therefore, these institutions cannot continue to operate inefficiently and incur further losses, because if they do, it will again become a burden on the Treasury."

Higher fuel costs are also affecting electricity generation and pricing, as fuel-based power production becomes more expensive.

"If we consider electricity bills, the increase in production costs due to fuel has had an impact. We tried to provide some relief from the government. Although tariffs increased by 18 percent this time, we structured it so that 95 percent of consumers would not be affected. Only around 5 percent of consumers are impacted by this increase."

The government has therefore attempted to manage electricity price hikes in a way that limits the burden on the majority of consumers.

The President stressed that while the government is trying to protect the public from rising costs, it cannot continue long-term subsidies at the current scale.

"The objective is to manage this in a way that does not burden the general public. However, we cannot continue to provide funds from the Treasury indefinitely to the Petroleum Corporation and the Electricity Board. Therefore, these institutions must be made more efficient, while ensuring benefits to the people. It is within all these constraints that we are working."