By The Pulseline News Desk
The Government is considering a subsidy to cushion the public from a possible increase in domestic fuel prices from October 1, as rising global petroleum prices put renewed pressure on Sri Lanka’s fuel pricing formula.
President Anura Kumara Dissanayake said the Government expected fuel prices to come under upward pressure at the beginning of next month based on prevailing international market prices.
Addressing a public rally in Akuressa on Sunday (20), President Dissanayake said calculations based on imported fuel costs and the existing pricing formula indicated that domestic prices would have to be revised upwards from October.
“According to global market prices, fuel prices need to be increased in October. When we calculate the cost based on imported fuel prices and the pricing formula, prices would have to increase from the first of the month,” he said.
However, the President indicated that the Government was looking at ways of preventing the full impact of such an increase from being passed on to consumers.
“When a major burden falls on the people, it cannot simply be passed on to them entirely. The Government has to provide some assistance to ease that burden,” he said.
He said the Government expected to provide a subsidy if necessary to reduce the impact of a potential fuel price increase on households and the wider economy.
The comments come as the Government faces a balancing act between maintaining the fuel pricing mechanism and limiting the impact of higher energy costs on consumers and businesses.
Energy Minister Anura Karunathilaka has also confirmed that a revision of domestic fuel prices could be considered towards the end of September in response to the recent increase in global petroleum prices.
Speaking at an event in Galle, Karunathilaka has said the Government was assessing whether consumers could absorb another increase, particularly as fuel prices in Sri Lanka were already at a relatively high level.
The Government’s decision will therefore have to weigh the cost of imported petroleum against the impact of higher pump prices on transport, businesses and household expenses.
Any increase in fuel prices could also feed into wider prices through higher transportation and distribution costs, while a Government subsidy would shift part of that additional cost to public finances.
The proposed approach also highlights the pressure facing the Government as it seeks to maintain price stability while responding to changes in international energy markets.
With the next scheduled price review approaching at the end of September, the Government is expected to determine whether the increase indicated by the pricing formula will be fully reflected at the pump or partly absorbed through State support.
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