• No burden on public, Treasury to cover the gap
• CPC retains cost-reflective pricing



Financial losses incurred by the State-owned fuel sector due to global crude oil price volatility will not be transferred to the public through future fuel price adjustments, according to the Treasury, with authorities maintaining that the intervention is fully contained within the approved fiscal framework.

Treasury Deputy Secretary Ananda Kithsiri Seneviratne outlined the composition of the overall relief package, noting that a total of Rs. 60 billion had been allocated for fuel subsidies under the Rs. 100 billion national relief packages.

“The remaining Rs. 40 billion is distributed across multiple sectors, including approximately Rs. 8 billion for consumer relief, around Rs. 15 billion for electricity subsidies, and allocations for agriculture and fisheries. The agriculture component ensures the distribution of fertiliser through 10,200 packages for the Yala season, while additional support has also been extended to the fisheries sector,” Seneviratne explained. 

Addressing concerns that the State-owned fuel sector may be reverting to an unsustainable subsidy model, Ceylon Petroleum Corporation (CPC) Managing Director Dr. Mayura Neththikumarage clarified that the cost-reflective pricing mechanism remained fully operational. 

“There is no situation where the CPC has moved away from the cost-reflective pricing mechanism. The CPC continues to operate under the same pricing formula. For example, if the actual cost of a litre of fuel is Rs. 500, the Treasury may instruct us to retail it at Rs. 400, while reimbursing the Rs. 100 difference directly to the CPC,” Dr. Neththikumarage said. 

He further noted that the subsidy mechanism was uniformly applied across all fuel distributors, ensuring a level playing field within the domestic market. 

“It is not only the CPC. Lanka IOC, RM Parks, and Sinopec too are covered under this framework. The Government has instructed all distributors to sell at the controlled price, with the Treasury reimbursing the difference. Therefore, it is the Government providing the relief, not the companies operating at a loss,” he added. 

The subsidy currently applies exclusively to octane 92 petrol and standard auto diesel, which together account for approximately 95% of domestic fuel consumption. Premium fuel categories, including octane 95 petrol and super diesel, remain priced at full cost-recovery levels. 

Seneviratne indicated that the continuation of the subsidy would depend on global oil price trends, with the Treasury expected to reassess the scheme once the initial Rs. 60 billion allocation was exhausted.

He reiterated that the subsidy programme did not require future recovery from the public, as it was already incorporated into the National Budget.