Despite efforts to liberalise Sri Lanka’s fuel market by introducing private players such as Sinopec and Lanka IOC alongside the Ceylon Petroleum Corporation (CPC), consumers continue to face high fuel prices with only marginal differences between suppliers.

A major factor behind this continued burden is the Rs. 50 per litre tax imposed in 2022, which remains firmly in place to repay legacy debt.

Introduced in 2022, the excise duty is being used to repay nearly $ 3 billion in debt that the Treasury absorbed from the CPC during the tenure of the previous Government. 

According to Treasury officials, the tax is non-negotiable as long as Sri Lanka remains under the current International Monetary Fund (IMF) programme, which mandates strict fiscal discipline.

When contacted by The Sunday Morning, Treasury Deputy Secretary Ananda Kithsiri Seneviratne explained that while pricing differences existed between the CPC and other fuel companies, all operators were required to pay the same Rs. 50 duty.

“The entire CPC debt was transferred to the Government’s debt stock. We have been servicing the interest on that debt for 18 years now. This Rs. 50 covers that repayment obligation,” he stated.

CPC Chairman D.J.A.S. De S. Rajakaruna acknowledged the pressure on consumers but said that removing the tax was not possible yet. “About half of the debt has been recovered so far, but it is difficult to determine when it will be fully cleared, especially given the volatility of currency exchange rates,” he noted.

Crucially, there are currently no plans to offer relief to the public, despite rising living costs. The CPC maintains that the surcharge must remain in place until the debt is entirely settled.