The real story behind the fuel queues in Sri Lanka appears to be more than just a supply issue, as political and financial interests seem to be at play. Fuel distributors have decided to stop selling fuel on credit to government institutions, including hospitals, until their dispute over revised commission rates is resolved. As a result, long queues have formed at fuel stations across the country.
Kusum Sandanayake, vice president of the Fuel Distributors Association, stated that nearly 500 fuel distributors stopped issuing fuel on credit yesterday in line with the association’s decision. This move followed their decision to stop placing new fuel orders, raising concerns that the fuel shortage may worsen by Monday. However, the Ceylon Petroleum Corporation (CPC) has invited the distributors for a discussion scheduled for Tuesday to address the issue.
The conflict began after the CPC reduced the commission paid to fuel distributors under its new pricing formula. Previously set at 3%, the commission has now been lowered to 1.7%. Fuel distributors claim that this adjustment has reduced their profits by more than 43%. However, CPC Chairman Janaka Rajakaruna denied these claims, stating that distributors have misunderstood the formula.
As a result of the protest, long fuel queues have been observed in Colombo and other provinces since Friday night. Distributors have alleged that foreign-owned filling stations, including those operated by LIOC, Sinopec, and RM Park, have also joined their protest. The CPC, however, refutes this claim, maintaining that only a limited number of fuel station owners are participating in the strike.
Despite the ongoing protests, CPC Chairman Rajakaruna assured the public that the government has sufficient fuel reserves for the entire year. He urged citizens not to panic and emphasized that legal action would be taken against any parties attempting to disrupt national stability.
Fuel distributors argue that under the new commission structure, a filling station selling 15 loads (99,000 liters of fuel) earns only Rs. 62,333 per month. However, the CPC Chairman disputes this, stating that a station selling the same volume should earn at least Rs. 683,415 per month. He also pointed out that fuel stations that sell higher volumes still earn substantial profits.
| Monthly Sales (Loads) | Gross Earnings (Rs.) | Net Profit (Rs.) |
|---|---|---|
| 15 loads | 1.1 million – 900,000 | 300,000 – 350,000 (Now reduced to 62,500) |
| 30 loads | 1.3 million | Over 300,000 |
| 60 loads | 2.3 million | Over 750,000 |
| 90 loads | 3.2 million | Over 1.2 million |
| 120 loads | 4.1 million | Over 1.6 million |
To prevent the unregulated expansion of fuel stations, the CPC has requested the University of Moratuwa to develop a mapping system for systematically locating new filling stations. New fuel stations located at least 15 kilometers away from an existing station will be eligible for an incentive of over Rs. 100,000.
An audit report has revealed that Sri Lankans have been paying higher fuel prices due to dealer commissions. In 2022, the National Auditor General determined that fuel prices increased by Rs. 10 per liter after the upper limit on dealer commissions was removed. The report found that petrol octane 92 rose by Rs. 8.64 per liter, petrol octane 95 by Rs. 11.10, Lanka Auto Diesel by Rs. 9.27, and Lanka Super Diesel by Rs. 10.95.
Beyond the immediate crisis, it is widely known that many CPC-operated fuel stations are indirectly owned by politicians. This raises serious concerns about whether the current fuel shortages and protests stem from genuine financial grievances or whether they are politically motivated efforts to manipulate fuel pricing policies. As the situation develops, the real battle over fuel in Sri Lanka appears to be not just about commissions but a deeper power struggle involving politicians, business interests, and government authorities.
