The government is examining legal options to let private fuel distributors set their own prices within a specified upper and lower range, Energy Minister Anura Karunathilaka said, Daily Mirror reported on Monday.
If adopted, it would be a change of a different order from the monthly pricing-formula adjustments that have dominated fuel policy this year. It moves the question from what the price should be to who sets it.
What forced it
Three private distributors — Lanka IOC (LIOC), Sinopec and RM Parks — have cut diesel distribution by roughly 50%, citing severe losses driven by rising global crude costs and the removal of the government diesel subsidy. Operators have been lobbying the Ministry of Power and Energy for an immediate price revision to avert station closures.
The scale of the losses the retailers claim was reported a week earlier by EconomyNext, which on 14 September quoted the same minister saying retailers reported losing up to Rs. 160 per litre of diesel, with some pumps already running empty.
“The global prices have risen sharply, but selling price in our country is far below the global prices,” Karunathilaka told reporters on 14 September. “Some private retailers have said they cannot go forward like this.”
Monday’s filing is the first indication that the response under consideration is structural rather than a one-off revision.
The conflict this creates
The proposal runs directly into the government’s stated position on consumers. The President said last week that pump prices must rise on 1 October under the pricing formula, with a partial subsidy to cushion the increase.
A price band for private operators and a subsidised state price are answers to opposite problems. One protects retailer margins; the other protects consumers. Sri Lanka has three private distributors and the state-owned CPC — if private firms may price to their costs and the CPC may not, the market splits in two. Neither the minister nor either outlet addresses how the two would coexist.
The minister also confirmed the government will conduct its monthly fuel price review at the end of September, based on import costs, and attributed the rise in global prices to the Middle East conflict after a period of lower prices that had allowed savings to be passed to consumers.
Not reported
Neither report specifies the legal mechanism — whether a Cabinet paper, a gazette, or an amendment to existing supply agreements. Neither gives the proposed ceiling and floor, says whether the band would cover petrol as well as diesel, or states whether the CPC would be brought inside the same framework.
Also unstated: how long the 50% diesel restriction has been in force, how many stations are affected, whether any have closed, and when a decision is expected. Daily Mirror does not say whether the three distributors have been consulted on the band proposal or what price they would consider viable.
