The landed cost of diesel into Sri Lanka is approaching USD 350 per barrel as Middle East disruptions and freight premiums push fuel import costs far beyond domestic prices, former Ceylon Petroleum Corporation Managing Director Susantha Silva said, warning that the gap between cost and price has rendered the current framework unsustainable.
Speaking at an ICCSL–Daily FT–ACCA webinar on Sri Lanka’s path during the Middle East crisis, Silva said diesel prices in the Singapore market crossed USD 292 per barrel on April 2, well above the previous peaks recorded in 2014 and 2022 when prices stayed below USD 150. Once supplier premiums, insurance and freight — which have risen from about USD 5 per barrel to roughly USD 60 — are added, the effective landed cost of diesel reaches near USD 350.
Domestic retail prices have not adjusted in line, with diesel currently sold at a loss exceeding Rs. 280 per litre. “If pricing remains below cost, fuel importers, including the CPC and other suppliers, may not be able to sustain imports even when supply is available in international markets,” Silva said.
The refinery itself constrains options. Sri Lanka’s facility, more than 60 years old, was designed to process Iranian crude, and following sanctions on Iran the country shifted to Abu Dhabi’s Murban grade. A recent Murban cargo arrived only after the refinery had already been shut down, with restart times of about two weeks adding operational costs. West Texas Intermediate is available as an alternative but transit times of 30 to 35 days and elevated freight reduce its viability.
The financing burden has more than doubled. A typical 40,000-tonne fuel shipment that once cost about USD 27–30 million now requires close to USD 70 million, raising risks to supply continuity. Alternative cargoes have been secured from Singapore, Malaysia and Indonesia.
Silva said the dynamic is global rather than Sri Lanka-specific, but its consequences are local. With energy inputs effectively priced below their economic cost, goods and services across the wider economy are produced at prices that do not reflect underlying input costs, with the difference absorbed inside the system.
The same FT report disclosed that the Joint Opposition has lodged a CIABOC complaint over CPC diesel imports, alleging an unsolicited supplier was awarded a USD 45 per barrel premium for a 248,000-barrel shipment while a USD 38 per barrel bid was rejected. The same procurement track was previously contested by Sajith Premadasa and underlies the 12-shipment forward supply plan the CPC has been defending publicly.
