Sri Lanka’s fuel retailers say deliveries have been cut back and they are struggling to keep stations running, and the government has signalled that a price revision could come by the end of September.
Kumara Rajapaksa, chairman of the Petroleum Station Owners’ Association, told a media conference that filling stations as well as the public are being hurt by foreign companies restricting fuel distribution, Hiru News reported. Every station carries fixed monthly operating costs, he said, and not receiving fuel makes those costs impossible to meet — including paying staff wages. The association asked the government to resolve the problem as quickly as possible.
The government’s answer
Energy Minister Anura Karunathilaka, asked by journalists the same day about shortages reported by several distribution companies, said a fuel price revision could be introduced by the end of September, taking account of rising global prices and the situation in the Middle East, the Daily Mirror reported.
International prices have risen but fuel is still being sold in Sri Lanka at comparatively lower prices, the Minister said. Several private distributors have told the government that continuing to operate in the present circumstances has become challenging. He said the government would meet company representatives before deciding, and that the options under consideration include a state fuel subsidy, as was provided previously, or a decision on prices.
How this connects
The two accounts describe the same squeeze from opposite ends of the chain. On 13 September, private distributors said they were losing about Rs. 170 a litre on diesel and asked for a return to cost-reflective pricing. A day later, the retailers downstream of them report that the fuel has stopped arriving — the commercial consequence of an unresolved pricing gap.
The pressure is external in origin. Brent has traded above US$100 amid the Strait of Hormuz disruption and the closure of Saudi Arabia’s main bypass pipeline, while tanker rates and war-risk insurance have climbed sharply.
Update — Monday evening: three options on the table, and the CPC’s own loss
Speaking to reporters later on Monday, Minister Karunathilaka set out the specific options the government is weighing, EconomyNext reported.
The first is a repeat of the April–May intervention, when the state paid a subsidy of Rs. 100 a litre on diesel and Rs. 20 a litre on petrol. The second is a straightforward decision on prices. The third is new: the government could set an upper and a lower limit and let private retailers choose their own selling price between the two.
“The global prices have risen sharply, but selling price in our country is far below the global prices,” the Minister said. He added that the government would weigh both consumers and the retailers’ complaints, and that there is no scarcity in fuel stocks.
The report also answers a question the earlier accounts left open — how the state supplier is faring. D J A S De S Rajakaruna, chairman of the Ceylon Petroleum Corporation, said the CPC is losing about Rs. 60 a litre on diesel, but that the loss is offset by profits from its refinery. He explained the gap against private retailers simply: “What we sell this month was ordered last month.”
One figure has moved. EconomyNext puts the private retailers’ claimed loss at up to Rs. 160 a litre on diesel; on 13 September the distributors’ own figure was Rs. 170. No outlet accounts for the difference, and neither figure is shown as a calculation.
Update — the loss figures resolve, company by company
NewsFirst has published the per-company losses submitted to the Ministry of Energy, and they explain the spread between the Rs. 160 and Rs. 170 figures that no outlet had reconciled: the numbers are not competing estimates of one loss, they are three different companies’ losses, NewsFirst reported.
| Supplier | Loss per litre of diesel |
|---|---|
| LIOC | Rs. 141 |
| RM Parks | Rs. 160 |
| Sinopec | Rs. 163 |
| Ceylon Petroleum Corporation | Rs. 60 (offset by refinery profit) |
The report also settles who has restricted supply: the Fuel Distributors Association says all three private companies have begun limiting diesel releases to their dealer networks. Its chairman, W.H.S. Fernando, said there is no fuel shortage in the country and put the problem squarely on allocation rather than stocks.
“The issue is that these private companies are not supplying their distributors with the quantities they require,” he said. “We held discussions with all three companies over the past few days and asked why they were unable to provide their dealers with fuel when the Petroleum Corporation continues to do so for its own distributors.”
The compensation claim
Kumara Rajapaksa of the Filling Station Owners’ Association set out the private suppliers’ underlying argument, which had not previously been reported: that when they entered the Sri Lankan market and signed their agreements, they were assured the government would compensate them for the difference whenever prices were fixed below cost. Because that compensation is not being paid, he said, they say they cannot go on selling at a loss.
NewsFirst also dates the end of the state subsidy more precisely than earlier accounts: the Rs. 100 per litre diesel subsidy was discontinued in July.
Diesel only
CPC chairman D.J. Rajakaruna drew the line the other reports blurred. “In reality, no company is making losses on petrol. We are not making losses on petrol either. The concern is specifically related to diesel prices.”
The reason his corporation can absorb the gap, he said, is structural rather than commercial: “The private companies only sell petrol and diesel. They do not operate refineries. Therefore, they may be experiencing losses.” CPC offsets its own diesel loss with refinery profit.
Update — September 15: “no diesel” boards are back up
The shortage has become visible at the pump. Boards indicating a lack of diesel were seen again on Monday at private filling stations in several parts of the island, Hiru News reported — the first report placing the supply restriction in front of motorists rather than in the distributors’ submissions.
Hiru frames the government’s position as a choice between two instruments: private distributors “may need to be provided with a subsidy, or a price revision may have to be made,” Minister Karunathilaka said, against the backdrop of the companies asking for a return to a cost-reflective pricing mechanism. The companies have restricted supply to filling stations on the grounds that no price aligned with their costs is available.
That confirms the sequence the earlier reports left implicit. The companies are not asking for a one-off increase; they are asking for the pricing formula to be restored, and the subsidy option is the government’s alternative to doing so.
Hiru’s second filing repeats the end-September signal and the Minister’s account of the options, and adds nothing to the Daily Mirror’s version.
Not reported
How many stations are affected and in which districts, how long the restriction has run, and what a revision would mean at the pump all remain unreported. No outlet says what a renewed subsidy would cost the Treasury, when the government’s meeting with the distributors takes place, or how any of the per-litre loss figures is derived. None explains how the companies’ general claim of losing “close to Rs. 100 a litre” squares with the Rs. 141–163 range in their own ministry submissions, whether the compensation assurance the retailers describe appears in the market-entry agreements in writing, or how a price-band mechanism would sit with the cost-reflective pricing formula agreed under the IMF programme.
