Fuel price hike warning from Dananath Fernando raises fears Sri Lanka could return to a 2022-style economic crisis if reforms are delayed.
A fuel price hike is urgently needed if Sri Lanka is to avoid sliding back toward the economic collapse experienced in 2022, Dananath Fernando has warned.
Mr. Dananath Fernando of the Advocata Institute said that if proper economic reforms and fuel price adjustments are not carried out under the current conditions, Sri Lanka could once again move toward the crisis situation seen in 2022.
He stated that when the available data is analyzed, warning signs are already beginning to appear if the country fails to follow the correct economic path.
According to Fernando, one of the key mistakes made in 2021 and 2022 was the failure to adjust prices properly. That delay, he said, caused fuel consumption to increase rapidly and placed heavy pressure on the economy.
He warned that a similar pattern is now being seen again in 2026.
In particular, he pointed out that petrol and diesel consumption increased sharply in March 2026 compared to March 2025.
One reason for this increase, he said, is that people are attempting to stockpile more fuel due to fear that price adjustments will be delayed.
According to the data he cited, the Ceylon Petroleum Corporation is currently making a loss of around Rs. 113 per litre of petrol and Rs. 238 per litre of diesel.
Fernando warned that these losses will not remain limited to the petroleum sector.
He said the losses will eventually affect the Ceylon Electricity Board as well, placing pressure on another major state institution.
When both the CPC and the Electricity Board turn to state banks and institutions such as the Central Bank of Sri Lanka and People’s Bank for support, the entire banking system could be placed at risk, he warned.
Fernando recalled that the same situation occurred during the 2021/22 period.
At that time, he said, more than Rs. 400 billion had to be spent to stabilize the banking system.
He also warned that international forecasts indicate global oil prices may rise further in the future.
If global market prices rise suddenly, Sri Lanka may find the impact unbearable, he said.
In such a situation, the rupee could depreciate again, or fuel queues could return, Fernando warned.
To avoid such a crisis, he proposed several urgent measures.
These include adjusting fuel prices in line with global market prices and strengthening direct subsidy programmes such as Aswasuma to protect poor people affected by price increases.
He also called for special concessions for public transport and the restructuring of state institutions such as the Ceylon Petroleum Corporation.
Fernando said CPC’s inefficiencies should not continue to be passed on to consumers.
He emphasized that if the right decisions are not taken at the right time, Sri Lanka faces a serious risk of returning to the political and economic instability experienced in 2022.
