Fuel price hike still leaves CPC and government facing heavy losses, with officials warning subsidies are ending and consumption must fall.
The fuel price hike introduced from May 30 has still not stopped major losses, with the government and the Ceylon Petroleum Corporation continuing to sell fuel below cost, according to the Minister of Energy.
The Minister stated that even after the recent price revision, the government and the CPC are still incurring significant losses on fuel sales. He emphasized that the decision to increase prices was taken to prevent the collapse of the domestic fuel market and to ensure uninterrupted fuel supply across the country.
According to the Minister, data available at the end of April showed that the total cost of a litre of diesel had reached Rs. 850. However, at that time, diesel was being sold in the market for only Rs. 392 per litre.
He revealed that while the government was bearing a burden of Rs. 100, the CPC had been forced to absorb a loss of Rs. 258 on every litre of diesel sold. It was also disclosed that diesel was not the only fuel being sold at a loss, with petrol, kerosene, and super diesel also being supplied below cost.
The Minister said the government had hoped that global fuel prices would fall as the war situation in the Middle East eased. However, that expected relief has not yet materialized. He warned that if a price revision had not been made under these circumstances, Sri Lanka could have faced fuel supply disruptions and a possible collapse of the fuel market.
He further stated that such a collapse would severely affect electricity supply and industries, creating a dangerous situation in which the entire economy could come under threat.
The Minister added that the government continues to bear approximately Rs. 100 in order to reduce the burden on consumers. He said the latest price revision was structured so that the remaining cost would be shared between the corporation and consumers.
CPC Chairman D.J. Rajakaruna also stated that even after the fuel price revision, both the government and the CPC are still suffering heavy losses on every litre of fuel. He urged the public to limit fuel consumption as much as possible under the current economic conditions.
The Chairman pointed out that although the current cost of a litre of diesel is Rs. 536, it is being sold at Rs. 407. He said the government bears Rs. 100 of that cost, but still incurs a loss of Rs. 29 per litre.
He further revealed that although the cost of a litre of petrol is Rs. 494, it is being sold for Rs. 434, resulting in a loss of Rs. 60 per litre.
Rajakaruna stated that the Rs. 57 billion allocated by the government for fuel subsidies will be exhausted by this month of June. As a result, he said it has become increasingly difficult to continue bearing these losses.
He also noted that fuel costs rose to US$ 522 million last month, compared to the previous level of US$ 100–120 million, creating what he described as an unbearable impact on the economy and dollar reserves.
Since rising fuel costs affect the entire economy and increase the prices of other goods and services, the Chairman emphasized that the public must act responsibly and reduce fuel consumption. He warned that failure to do so could worsen the dollar crisis.
Rajakaruna also stated that close attention is being paid to filling stations that do not properly implement the QR code system introduced for fuel control.
He further said that while the commission paid to filling station owners has been increased, steps will be taken from this week to cut incentives for filling stations that fail to comply with the QR system.
