Treasury and the Petroleum Corporation are preparing to decide fuel prices

The Treasury and the Ceylon Petroleum Corporation (CPC) are currently paying special attention to determining fuel prices in Sri Lanka. The main reason for this situation is that the massive allocation of Rs. 57 billion, previously set aside by the government for fuel subsidies, is nearing its end.

However, even if the current subsidy program ends, the government is focused on maintaining current fuel prices without an increase domestically, provided that crude oil prices in the world market remain stable. For this reason, it is reported that authorities are closely monitoring price fluctuations in the international market before making a final decision on revising domestic prices.

This information has been revealed amidst some uncertainty regarding the future of the fuel subsidy program introduced by the government in the first half of this year. Under the relevant subsidy program, a subsidy of Rs. 100 per liter of auto diesel and Rs. 20 per liter of petrol was provided, and for this, an initial sum of Rs. 57 billion was allocated for a period of three months. Although many expected this subsidy scheme to end at the end of June, officials clarify that its continuation is determined not by a specific timeframe, but solely by how the allocated funds are utilized until they are exhausted.

Mr. Mayura Nettikumara, Managing Director of the Ceylon Petroleum Corporation, points out that these fuel subsidy measures will remain in effect until the entire allocated fund is exhausted. Contrary to public belief, this mechanism will not automatically cease at the end of the month, and the government must officially inform the corporation whether or not the subsidy will be continued further. He also mentioned that a favorable environment has been created to maintain current fuel prices as they are, due to the decline in international oil prices.

As of last Friday, the price of a barrel of diesel in the world market had fallen to US$125, and if this global price drop remains stable in the long term, it will be possible to maintain current domestic fuel prices without heavily relying on additional government subsidies. However, the Managing Director states that price adjustments cannot be made based solely on short-term market changes, emphasizing that global oil prices must consistently remain at such low levels as an average value to justify a permanent policy revision. If the world market price remains stable at the $125 mark, it is possible to provide fuel at the current price even without the subsidy.

According to current prices, vehicle owners in Sri Lanka can purchase a liter of Lanka Petrol 92 Octane for Rs. 434 and a liter of Lanka Auto Diesel for Rs. 407. Considering higher-grade fuel prices, a liter of Lanka Petrol 95 Octane remains unchanged at Rs. 495, and a liter of Lanka Super Diesel at Rs. 478. Any decision regarding the extension, revision, or removal of these fuel subsidies will be made in the future solely based on the direct guidance and decision of the government, taking into account prevailing sustainable market trends.