- Private suppliers claim diesel losses of up to Rs. 163/litre
- Brent at $ 103; WTI above $ 101
- CPC refinery profits cushion diesel losses
Sri Lanka will hold off on an immediate fuel price revision despite global crude oil prices remaining above $ 100 per barrel and regional countries moving to raise prices, subsidise consumers, and conserve fuel in response to renewed Middle East tensions, the Ministry of Energy reveals.
Ministry of Energy Secretary G.M.R.D. Aponsu told The Sunday Morning that there was no immediate requirement to revise domestic fuel prices, as Sri Lanka had gradually adjusted prices since the Middle East crisis began several months ago.
However, he said that prevailing international prices would be taken into account when fuel prices were assessed at the upcoming regular monthly review.
The Government’s position comes as Brent crude remained above $ 100 per barrel on Friday (18), despite easing from recent highs.
Brent crude fell $ 1.65 to $ 103.17 per barrel on Friday, while US West Texas Intermediate (WTI) declined by $ 0.61 to $ 101.30 per barrel. Brent was heading for a weekly decline of around 1.4%, its first weekly fall in three weeks.
Nevertheless, international oil markets remain volatile as the Middle East conflict continues to threaten major oil-producing and shipping routes.
Prices had risen earlier in the week following disruptions to Saudi Arabian crude exports through its Red Sea facilities. Supply concerns subsequently eased as Saudi Arabia moved additional crude through alternative routes, including ship-to-ship transfers off Oman.
Despite the latest decline, Brent remains substantially higher than at the beginning of the year, reflecting the impact of the Middle East conflict on international energy markets.
Sri Lanka’s decision to wait until its regular pricing review contrasts with more immediate interventions elsewhere in South Asia.
Pakistan has repeatedly raised fuel prices in recent days as international oil prices increased. On Monday (14), petrol was increased by PKR 4.42 per litre and high-speed diesel by PKR 6.10. This followed an earlier increase on 11 September of PKR 5.02 per litre for petrol and PKR 5.28 for diesel.
Pakistan subsequently moved to more frequent fuel price adjustments. Its latest revision for Friday reduced petrol by PKR 0.43 to PKR 390.79 per litre but increased high-speed diesel by PKR 3.47 to PKR 424.92 per litre.
The Pakistani Government has simultaneously introduced a targeted subsidy of PKR 100 per litre for motorcycles, rickshaws, and small cars, subject to consumption limits, in order to cushion lower-income consumers from the surge in prices.
It has also reintroduced austerity measures to conserve fuel, including a 50% reduction in fuel allocations for official vehicles, restrictions on foreign travel by Government officials, and a ban on the purchase of new State vehicles. Markets have also been ordered to close by 9 p.m.
Bangladesh, meanwhile, has chosen to hold domestic fuel prices unchanged for September, marking the fourth consecutive month without a revision. Diesel remains at Tk 115 per litre, petrol at Tk 140, octane at Tk 145, and kerosene at Tk 135.
However, Bangladesh has been particularly exposed to the regional energy shock. The country currently faces gas demand of around 107–113 million cubic metres per day against available supply of only around 74 million cubic metres, while Liquefied Natural Gas (LNG) imports fell by 83% between July and August amid disruptions linked to the Middle East conflict.
India has also intervened in its fuel market, although its latest measures have focused partly on ensuring domestic availability. From Wednesday (16), New Delhi reduced its export levy on petrol by INR 1 per litre, diesel by INR 5, and aviation turbine fuel by INR 4. Export duties had initially been introduced in March to discourage exports and safeguard domestic supplies during the West Asian crisis.
Against this volatile regional backdrop, Aponsu said that Sri Lanka had already absorbed global price movements through gradual adjustments to domestic fuel prices since the crisis began, reducing the need for an immediate revision.
He said that the Ceylon Petroleum Corporation (CPC) adjusted prices through the monthly pricing mechanism, while the other major players – Lanka IOC (LIOC), Sinopec, and RM Parks – generally adjusted their retail prices in line with the CPC.
Aponsu added that the CPC was currently not recording an overall operational loss, with earnings from refinery operations helping offset pressure from the higher cost of imported petroleum products.
However, diesel remains a pressure point in the domestic market.
The CPC has acknowledged losses on diesel, although profits generated by its refinery operations have allowed the State-owned supplier to absorb them. Private retailers do not have the same refinery income available to offset losses.
The Government had earlier provided a Rs. 100 per litre subsidy on diesel as international prices surged, but the subsidy was discontinued in July.
The Government is now considering several options to deal with continued international price pressure, including renewed subsidies, upper and lower price limits for private suppliers, or a revision of retail fuel prices.
For now, however, Aponsu said that there was no requirement for an immediate intervention, with the impact of global oil market movements to be assessed at Sri Lanka’s next scheduled monthly fuel price review.
Meanwhile, as reported last week, private fuel suppliers – LIOC, Sinopec, and RM Parks – have sought an increase in diesel prices, citing mounting losses due to higher international fuel prices and import-related costs.
Figures submitted to the Energy Ministry reportedly indicate that LIOC claims to be losing around Rs. 141 per litre of diesel, while RM Parks and Sinopec have reported losses of around Rs. 160 and Rs. 163 per litre, respectively.