The government has decided to provide a subsidy of Rs. 100 per litre on diesel and Rs. 20 per litre on petrol for the next three months, with Rs. 57 billion allocated by the Ceylon Petroleum Corporation to fund the programme.
Ceylon Petroleum Corporation and Ceylon Petroleum Storage Terminals Ltd. Chairman D.A. Rajakaruna confirmed the subsidy on Monday, framing it as a cushion against fuel prices that are expected to remain elevated due to the continuing war in the Middle East.
Rajakaruna said the cost of importing and distributing one litre of diesel currently stands at around Rs. 750, while the retail price is Rs. 392 — leaving a loss of about Rs. 358 per litre. The Rs. 57 billion allocation translates that gap into a fixed-term consumer relief package rather than an open-ended commitment.
The Chairman linked the subsidy directly to the foreign exchange impact of fuel imports. Sri Lanka spent USD 522 million on fuel imports in April, falling to USD 324 million in May. He urged the public to limit fuel consumption to ease pressure on the rupee.
Refinery operations are continuing without interruption, Rajakaruna said, and arrangements are in place to secure refined fuel products — including petrol and diesel — until August, barring an unexpected emergency. High global market prices remain the main risk to that outlook.
The Chairman also flagged plans to remove the current odd-even fuel distribution system in the future, while retaining the QR code rationing platform. Direct subsidies on kerosene and diesel for farmers and fishermen are being developed into an online payment system. Approximately 1,000 tonnes of diesel are consumed daily for power generation, and Rajakaruna asked the public to minimise electricity use during night hours, with relief measures planned for Vesak week.
The formal three-month programme builds on the Rs. 100 diesel subsidy announced in principle by President Anura Kumara Dissanayake and IMF Mission Chief Evan Kozack’s measured response on cost-recovery during the May 15 press briefing.
