The Ceylon Petroleum Corporation has requested an urgent meeting with President Anura Kumara Dissanayake to agree fresh measures to cushion Sri Lanka against a global oil market that its chairman describes as alarming for the country.
CPC Chairman D.J. Rajakaruna said diesel prices have climbed 45 per cent and petrol prices 30 per cent against the rates that prevailed at the start of July, with crude prices rising sharply over the same period. Sri Lanka imports all of its fuel, leaving the state refiner fully exposed to the swing.
“We have sought a meeting with the President to discuss what needs to be done. Consumption reduction is needed,” Rajakaruna told the Daily Mirror. He said the public should be made aware of the worsening trend, and that other retail fuel distributors in the domestic market have also reported difficulty selling fuel at current prices.
The pressure stems from supply disruptions tied to the conflicts involving Iran and Ukraine. Physical crude cargoes in the Middle East, Europe and Africa reached two-month highs this week, with some nearing US$110 a barrel as buyers scrambled to secure prompt supplies from alternative sources, according to Reuters figures cited in the report.
Compounding the import bill is a second, domestic problem. Rajakaruna said the dry spell driven by El Niño conditions has cut hydropower generation capacity, forcing the CPC to release growing volumes of fuel from its stocks for thermal power generation.
“This is yet another serious challenge for us. We are now compelled to release increasing quantities of fuel from our stocks to generate power in the absence of adequate hydropower generation,” he said.
The twin squeeze — higher import prices and higher volumes burned for electricity — places renewed strain on foreign reserves and on the fuel pricing formula, and revives the question of whether the government absorbs the increase or passes it to consumers at the pump.
