Sri Lanka’s private fuel distributors have asked the government to urgently reinstate a cost-reflective pricing mechanism, saying cash flow strains and mounting losses have made retail fuel distribution unviable, Hiru News reported.
The operators have submitted joint representations to the Ministry of Energy, addressed to both the subject minister and the ministry secretary.
The numbers
Private suppliers are losing an estimated Rs. 170 per litre of diesel, according to the report, driven by rising global market rates and high maritime freight costs.
Government relief that had cushioned those losses was withdrawn two months ago. During the second quarter the state paid Rs. 100 per litre on diesel and Rs. 20 per litre on petrol; that support was discontinued in July.
A third constraint is physical rather than fiscal. Vessel draft limits at local discharge berths restrict which import tankers can be used, and the combination has cut the liquidity operators need to finance upcoming shipments.
The distributors argue that unless a standardised cost-reflective structure is applied equally across all four market distributors, maintaining uninterrupted supply across retail networks will become increasingly difficult.
Why it matters now
The complaint puts a figure on a squeeze that until now has only been visible in fragments. The Ceylon Petroleum Corporation said on Friday there would be no sudden fuel price increase this month while it studies a revision in line with world prices — and that report also noted private stations had begun restricting diesel sales because of losses under the pricing formula. This is the first account of the scale of those losses.
The market backdrop has moved sharply against importers. Brent passed US$108 a barrel on Thursday, its highest since May, and the industry is now pricing in a long conflict with record tanker rates — freight and war-risk insurance that land directly on the landed cost of every cargo.
Cost-reflective pricing is not a domestic preference but an IMF programme commitment; the government has separately been designing an automatic fuel and electricity tariff mechanism intended to replace ad-hoc revisions, with the Rs. 100 per litre diesel subsidy feeding into its targeting rules.
Private distributors have raised margin and pricing complaints before — Sinopec raised Super Diesel by Rs. 600, Lanka IOC lifted diesel prices in April, and Sinopec has been in a standoff over its Hambantota market share.
Sourcing note
Hiru News attributes the story to unnamed sources throughout, using the formulations “it is understood”, “sources indicate” and “it is learnt”. No distributor, official or document is named, and the Rs. 170 figure is presented as an estimate rather than a published number.
No other verified newsroom had filed its own report at the time of writing. The Daily Mirror, NewsFirst, EconomyNext, Daily FT, the Island, Daily News, Colombo Gazette and News.lk carried nothing on the representations; Ada Derana was returning a CloudFront block.
Not reported
The report does not name the four market distributors, say when the representations were submitted, or state whether the Energy Ministry has responded. It does not explain how the Rs. 170 per litre loss is calculated or against which grade and price point, whether the state distributor faces a comparable gap, or what the withdrawn Q2 subsidy cost the Treasury.
It also does not say which berths the draft restrictions apply to, whether any operator has warned of imminent supply interruptions, or what “urgently” means as a timetable.
