• Subsidies of Rs. 100 for diesel, Rs. 20 for petrol cushion consumers

Ceylon Petroleum Corporation (CPC) Chairman D.J.A.S. De S. Rajakaruna on Friday (17) issued a detailed clarification refuting claims that Sri Lanka had purchased crude oil at prices exceeding global market rates, describing such reports as misleading and based on a misinterpretation of fuel pricing data.

Speaking at a press briefing, Rajakaruna stressed that the widely cited figure of $ 286 per barrel referred to refined diesel, not crude oil, which carried significantly higher costs due to global market conditions.

“We have not purchased a barrel of crude oil for $ 286 in any way,” he said, firmly dismissing the claims and noting that what had been purchased at the cited price was diesel. 

Addressing the controversy’s origin, Rajakaruna pointed to a statement issued by HSBC CEO Georges Elhedery, noting that the bank had referred only to a general “oil purchase” without specifying crude oil. He stated that the issue had arisen from either a misunderstanding or a deliberate misrepresentation of the statement. 

“The problem is either a misunderstanding of the statement… or it has been intentionally broadcast in a wrong way,” he charged, warning that such misinformation could trigger unnecessary public panic and fuel queues.

The CPC Chairman explained that the term ‘barrel of oil’ had been incorrectly interpreted, causing confusion between crude oil and refined petroleum products.

Highlighting the distinction, Rajakaruna said that while crude oil prices remained relatively low, refined products such as diesel and petrol were significantly more expensive due to refining costs, global supply disruptions, and market volatility. 

He noted that the average global price of diesel rose sharply in recent months, increasing from $ 191.73 per barrel in March to $ 199.70 in April, with peak averages reaching $ 242. 

When additional premiums and insurance costs – driven by global supply risks – are factored in, these costs surge from around $ 3–4 per barrel to as high as $ 48–50, pushing the total price of some refined diesel shipments to between $ 281 and $ 288 per barrel.

Super diesel prices go even higher, reaching up to $ 337 per barrel under certain market conditions.

“There is a huge difference between the price of crude oil and the price when taking it as finished products like petrol or diesel,” Rajakaruna said, emphasising that refined fuels were subject to entirely different pricing dynamics.

Providing data to counter the claims, he stated that Sri Lanka had purchased crude oil at $ 66.99 per barrel in March, while subsequent shipments had been priced at $ 71.99. Future orders secured through Letters of Credit range from $ 71.81 to $ 113.29 per barrel.

He also highlighted the financial burden borne by the Government and CPC in subsidising fuel prices to shield consumers from global price shocks.

According to him, the Government currently subsidises approximately Rs. 100 per litre of diesel, while the CPC contributes an additional Rs. 63 per litre. For petrol, the Government provides a subsidy of Rs. 20 per litre, with the CPC adding Rs. 7.

He emphasised that these subsidies were funded through public tax revenue, underscoring the importance of responsible fuel consumption.

“If we don’t buy oil this way, there will be no oil supply in the country,” he claimed, defending the necessity of purchasing refined products at higher global prices to maintain an uninterrupted supply.