By The Pulseline News Desk
Sri Lanka could be heading toward another fuel price increase, with President Anura Kumara Dissanayake (AKD) warning that current diesel prices are unsustainable and that the state-run Ceylon Petroleum Corporation (CPC) is absorbing massive losses.
Speaking amid renewed concerns over energy costs and public spending, the President said the Corporation is effectively spending around Rs. 720 per litre on diesel, a figure far above current retail prices. He argued that continued subsidies are encouraging excessive fuel consumption while placing unbearable pressure on public finances.
The remarks come at a politically sensitive moment. Sri Lankans, still recovering from the economic collapse of 2022 and the long queues that defined the fuel crisis, are already grappling with a high cost of living. Any suggestion of another increase is likely to trigger anxiety among households, transport operators, and businesses dependent on diesel-powered logistics.
Yet the government appears to be framing the issue not simply as a pricing adjustment, but as a question of economic survival.
“Consumption must be curbed”
According to the President, artificially low prices distort consumption patterns and deepen the losses of the CPC. His comments suggest the administration is preparing the public for a difficult policy decision: either maintain subsidies and increase fiscal strain or raise prices and risk public backlash.
Energy economists note that diesel remains central to the country’s transport and agricultural sectors. Buses, trucks, fishing fleets, and generators all rely heavily on diesel, making any increase immediately visible across the economy. Higher fuel costs often translate into rising food prices, transport fares, and production expenses.
Critics argue that ordinary citizens should not bear the burden of inefficiencies within state institutions. Trade unions and opposition politicians are also expected to question how the reported Rs. 720 cost figure was calculated and whether operational reforms within the CPC could reduce losses before prices are passed on to consumers.
Supporters of market-based pricing, however, say the government has little room to maneuver. Sri Lanka remains under pressure to maintain fiscal discipline under its reform programme following the country’s sovereign debt crisis. Subsidizing fuel on a large scale could undermine broader economic recovery efforts and weaken state revenue.
Echoes of the crisis years
Fuel pricing has become one of the most politically charged issues in post-crisis Sri Lanka. In 2022, shortages of foreign exchange left the country unable to import sufficient fuel, triggering nationwide shortages and long queues that became symbolic of the wider economic meltdown.
Subsequent governments moved toward a pricing formula linked to international market rates and exchange rate fluctuations. While this mechanism reduced shortages, it also exposed consumers to global price volatility.
President Dissanayake’s latest comments suggest the administration may now be prioritizing fiscal stability over price relief, even at the risk of public dissatisfaction.
What happens next?
No formal announcement on a price revision has yet been made. However, analysts say the President’s remarks are unlikely to have been accidental. Public statements about unsustainable diesel costs are often seen as precursors to policy adjustments.
If prices rise again, the government may face demands for targeted relief measures, especially for public transport operators and low-income households. Economists also warn that sudden increases without social protections could slow consumer spending and add fresh inflationary pressure.
For many Sri Lankans, the debate is no longer simply about fuel. It is about whether the country can balance economic reform with the everyday realities of citizens still struggling to rebuild after years of crisis.
Leave a comment