In a powerful parliamentary address, Sri Lanka’s President lays bare the high-stakes diplomatic maneuvers behind the nation’s ironclad neutrality, rejecting military requests from both Washington and Tehran while orchestrating a daring rescue of over 100 war victims. As global conflict threatens fuel supplies and hidden cartels crumble, he issues a stark warning: this island will bow to no power.
In particular, there is a conversation regarding the current war situation in the Middle East and the difficulties encountered by different nations globally in this regard. I wish to extend my heartfelt thanks to those who suggested that our Parliament allocate time for this discussion.
Specifically, our unwavering stance on this matter is one of neutrality. We can maintain the dignity of our nation, guarantee justice and achieve international acknowledgment solely by safeguarding our neutrality. Consequently, under no circumstances, no matter the pressures we encounter, will we permit this neutrality to be undermined. However, I am aware that certain Members of Parliament and other parties have expressed differing views, suggesting that we may be aligned with a particular group or that certain decisions were not taken in a timely manner. Such assertions are entirely baseless.
With regard to the issue concerning Iranian vessels, a request was made to us on 26 February, 2026 for three naval ships to visit Sri Lanka on 9 and 13 March as part of a goodwill visit aimed at strengthening cooperation. We were in the process of reviewing this request for approval. On the same evening, the United States also requested permission for two warfare aircrafts to land at Mattala International Airport in Sri Lanka. We took a clear and firm decision based on our policy of maintaining neutrality. At that time, there were already indications of escalating military tensions.
Consequently, we did not grant approval for either of these requests. Some questioned why permission was not granted for the Iranian vessels. Had we done so, it would have compromised our overall neutrality. Furthermore, it would have brought a military conflict, which was distant from our region, closer to Mattala and the Port of Colombo. Regardless of the pressures faced, we acted to safeguard the country and preserve our neutrality.
Subsequently, on the 27th, it was reported that a sailor aboard the vessel IRIS Bushehr had fallen and sustained injuries. A request was then made for both the injured sailor and an accompanying officer to be brought to Sri Lanka. Our commitment to neutrality and our international obligations require us to provide assistance in such situations. Accordingly, the naval officer and the injured sailor were transferred to Durdans Hospital for medical treatment. They were brought to Sri Lanka through arrangements made by a company responsible for supplying services to the shipping line.
Subsequently, on the 4th, it was reported that a vessel belonging to Iran had been attacked near the boundary of our economic zone. Although the incident did not occur within our territorial waters and we could have chosen to remain uninvolved, our commitment to international obligations and humanitarian principles guided our response. Accordingly, the Sri Lanka Navy and the Air Force conducted a significant search and rescue operation. There are established international standards governing such operations, including the duration of observation following an explosion and the distance to be covered, depending on wind and sea conditions. We adhered strictly to these internationally recognised protocols. As a result of these efforts, we were able to bring ashore 32 injured persons and 84 bodies. This reflects our commitment to humanity and our steadfast neutrality.
Following that attack, a request was made to us to allow another vessel, which had reportedly suffered an engine failure, to approach Colombo Port. We noted that some have claimed that action should have been taken 11 hours earlier. However, this is not accurate. The initial request we received on 26 February was for the vessel’s arrival on 9 March. It appears that there is some confusion regarding the dates and timelines. The request concerning the second vessel, which cited an engine malfunction, was made only after the first vessel had been attacked, seeking permission to reach Colombo Port. Our decisions were made based on accurate information, proper procedures and a careful assessment of the situation.
They are a party to the conflict in a war situation. According to international law, if they enter our territorial waters, they may be permitted to remain for a maximum of 24 hours. Within that period, they must depart; otherwise, they must come under our jurisdiction. This is the only way in which our neutrality can be preserved. After coming under our jurisdiction, a request was made for the entire group to remain. Accordingly, we brought 206 naval personnel to a Sri Lanka Navy base. We did not allow these 206 individuals to intermingle freely. We understand that they are soldiers who have been under significant stress and we recognise that such situations can lead to various developments. Therefore, we acted with caution, providing them with necessary food, water and medical care. We treated them with the utmost humanity. It is through such conduct that Sri Lanka earns recognition and respect in the international community.
Subsequently, they requested permission to repatriate the bodies of the deceased to their country. We granted approval for this request. In addition, 32 individuals who had been injured in the attacked vessel were admitted to the Karapitiya Hospital. All of them have now recovered and are currently being accommodated at the Koggala Air Force Base. Accordingly, in this conflict situation, our policy remains to consistently uphold and preserve neutrality at all times.
Furthermore, a proposal concerning these attacks was recently brought before the United Nations Security Council. While many States expressed their support for the proposal, we did not extend our agreement, as we considered it to be incomplete. We consistently advocate for justice and fairness on the international stage and our actions reflect this principle. Accordingly, in all our activities, policies, decisions and engagements, we have ensured that our neutrality is maintained. In such a conflict situation, this is the approach through which we can safeguard the identity and dignity of our motherland, as well as uphold its international recognition.
At a critical and decisive moment at the international level, we must always speak the truth. Therefore, unfounded allegations should not be made. There are attempts to create a narrative that the first vessel was lost due to the inaction of the Sri Lankan Government. Such claims are extremely reckless and inhumane. From an international perspective, they represent a deeply regressive approach. Accordingly, I expect all parties to act with responsibility when addressing this issue.
Two aircrafts from the United States requested permission to remain at Mattala International Airport on the 4th and 8th. It was also stated that eight anti-ship missiles were mounted on these aircraft. Some have argued that Sri Lanka has entered into a defence agreement with the United States. Therefore cannot avoid becoming a party to the conflict. This is incorrect. There is no provision within that agreement that relates to our position in such a war or obliges us to take part in it.
The agreement covers areas such as aviation-related activities, training programmes associated with maintenance services, awareness of maritime domains, cyber security and secure communications, as well as humanitarian assistance and disaster response. Accordingly, we have clearly maintained and continue to uphold established international policies and principles.
When we consider the nature of this conflict, one party has entered the war with the objective of entirely changing the governing system of the state concerned. The other side’s military strategy appears to rely on exerting pressure on the global economy. This is reflected in the initial targeting of airports, followed by ports, oil refineries and vessels transporting oil. These actions illustrate a strategy in which their security is, to some extent, based on exerting economic pressure on the global community.
In particular, we have two key economic sources centred on the Middle East. The first is the supply of gas and fuel, which is of critical importance to our economy. The second is our overseas Sri Lankan workforce. Nearly one million Sri Lankans are employed in that region and they contribute a significant share to our national economy. Therefore, this is not an internal crisis. It is an external shock and we must carefully assess how it may impact us and respond accordingly.
Accordingly, we have identified the nature of this external shock in two key areas, foreign exchange and energy supply chains. In response, the Ceylon Petroleum Corporation has been operating in a highly systematic and disciplined manner. In the past, ad hoc or spot purchases led to serious issues of corruption within the Corporation. Therefore, we have consistently sought to secure energy supplies through long-term tenders. At the same time, we have been engaging in discussions with various countries to explore the possibility of entering into government-to-government agreements. Currently, refined fuel is supplied to us through companies based in Singapore and India. As such, there has not yet been any disruption in relation to long-term tenders for refined petroleum products.
However, crude oil remains the primary concern. A shipment of 90,000 metric tonnes was scheduled to arrive on the 24th and 25th of March under a long-term tender. Due to the prevailing situation, the supplier has postponed the vessel’s arrival by one day. In addition, another tender for 90,000 metric tonnes has not been fulfilled as expected. Accordingly, we examined where the issue might arise. The non-arrival of these two crude oil shipments represents the key points at which challenges could emerge. In response, we issued a tender on 5 March, which was opened on the 17th of the same month. Typically, our refinery is able to meet around 35% of the country’s fuel requirements through domestic production. If challenges arise in crude oil supply, we must carefully assess how to continue importing refined fuel to ensure stability.
Accordingly, on the 5th, we called for tenders for diesel, petrol, furnace oil, aviation fuel and two crude oil shipments. These tenders were opened on the 17th. As a result, a tender for diesel was awarded, with the shipment expected to arrive on the 6th and 7th of April. A petrol tender was also awarded, scheduled to arrive on the 16th and 17th of April. A furnace oil tender was awarded, with the shipment expected on the 12th and 13th of April. An aviation fuel tender was also awarded, with delivery expected on the 10th and 11th of April. Regarding crude oil, one tender was scheduled for April and the second for June. No company submitted a proposal to supply crude oil in April. However, one company indicated that it could supply a crude oil shipment in June. Accordingly, that tender has been awarded.
In continuation of the same tender process, we awarded another diesel tender on the 18th. Discussions are currently ongoing in this regard and an agreement has been reached to supply the shipment around the 7th and 8th of April.
Furthermore, as a result of this crisis and conflict, disruptions have arisen in our planned energy supplies. We were expecting two crude oil shipments of 90,000 metric tonnes each. In addition, a petrol and diesel shipment was also scheduled but has been delayed. There was also a shipment arranged through a private company comprising approximately 35,000 metric tonnes of petrol and diesel, which has likewise been postponed. In response, we have assessed how best to address these shortfalls and taken steps to bridge the gaps in supply accordingly.
Is it possible for us to import large volumes at once? In reality, we cannot bring in and store such large quantities in bulk. The challenge lies in ensuring that as one shipment is being unloaded at the port, the next vessel is scheduled to arrive in a timely manner. Typically, it takes around eight days to unload a fuel shipment. During this period, the facility remains occupied and no other vessel can be accommodated. Therefore, we are carefully coordinating and sequencing these shipments, closely monitoring capacity and availability to ensure a continuous and uninterrupted supply.
Through the new tender process, we sought to mitigate these potential disruptions. The tenders were called on 5 March, with a high level of advance preparation. We had already identified where challenges might arise and anticipated possible disruptions, particularly in relation to the two crude oil shipments expected from Fujairah. It is from this crude oil that we produce essential fuels, including furnace oil, Jet A-1, diesel, petrol and kerosene. Accordingly, we called for tenders covering all five categories on 5 March. Therefore, it is clear that we did assess the situation in advance and took the necessary measures proactively to address any potential crisis.
We are aware that, in situations of this nature, a black market tends to emerge globally, this is a common occurrence. However, our foremost priority is to ensure the uninterrupted supply of energy. Our objective is to maintain continuous energy provision without any disruption. As a second step towards this goal, the Cabinet approved a decision last week to appoint a special committee. Various companies have been invited to submit offers. This committee operates without political interference and conducts a thorough evaluation in consultation with relevant state officials. It carefully assesses the credibility of the companies, their financial capacity and, importantly, their ability to deliver within the required timeframe. Port capacity is available only on specific dates and therefore we have made arrangements to grant approval to vessels that align with these schedules. Several proposals have already been received and the committee is currently reviewing them. Accordingly, there is a possibility of granting approval for a crude oil shipment and we expect that a vessel could be secured before approximately the 12th.
If all these alternatives prove successful simultaneously, there is a possibility of an excess. However, we are prepared to take that risk. Conversely, if even one of these options fails, a shortage could arise. A shortage would be far more detrimental than an excess. There is also the possibility that several vessels may have to remain at the port, resulting in demurrage charges. Nevertheless, we are prepared for such eventualities. I wish to state this clearly in advance, so that it is not later suggested that vessels were brought in and kept waiting for days, incurring additional costs without justification.
The nature of the conflict has created a situation that cannot be precisely predicted. Accordingly, we have pursued all possible alternative measures. In parallel, we engaged in discussions with exporters. Five private companies are currently involved in bunkering operations and they have indicated their capacity to supply fuel to export-oriented industries. We have therefore issued licences to them without delay. While they are not authorised to release fuel to the general market, they have, since the day before yesterday, commenced supplying fuel required by exporters. It is comparatively easier for private companies to procure fuel, as they are accountable primarily for their own operations, whereas we are accountable to the public. As a result, private entities have been able to source and deliver fuel more rapidly. Accordingly, they are now supporting the supply of fuel to the export sector.
We also considered how best to proceed through government-to-government engagement. There had previously been sanctions in place in relation to Russia, which were lifted on the 11th. I have observed that some have questioned whether we could not have moved forward with Russia. It is important to understand the broader context. Approximately 25% of our exports are directed to the United States. As you may recall, even in dealing with tariff-related issues involving neighbouring countries, we were compelled to limit certain engagements with Russia to some extent. Therefore, we must act with caution. During the tariff issue, there were strong calls as to why we did not fully align with the United States to resolve the matter. Now, the argument has shifted to why we are not aligning with Russia to address the present situation. Such contradictory positions reflect the range of views being expressed in this Parliament. Discussions on tariff-related matters are ongoing, and it is evident that differing opinions continue to emerge, both within Parliament and beyond. Indeed, those who voice such views are not confined to Parliament alone, but are also present in wider public discourse. Those who spoke about Russia in a press conference were also sitting there.
Accordingly, we need both to resolve the tariff issue and to obtain oil from Russia. We were given an open opportunity for that on the 11th. From that point, we began discussions. There has been some progress in those discussions and we will be able to present reports on that progress to you very soon. Therefore, I can responsibly state that, as a government, all necessary measures that can and must be taken to manage any potential issues in the energy sector have been implemented at the appropriate time.
The next main issue is pricing. Several factors influence price fluctuations. The primary factor is the appreciation of the US dollar. When the dollar strengthens, our fuel prices increase. Secondly, if global fuel prices rise, our fuel prices also increase. Additionally, taxes also play a role.
The energy sector crisis during 2022 and 2023 was not caused by global energy price increases. The main issue was the appreciation of the US dollar. For example, the dollar rose from Rs. 185 to Rs. 372, and even reached Rs. 400 in the black market. During that time, petrol prices increased from Rs. 137 per litre to Rs. 420. Therefore, the crisis was not driven by global price fluctuations but by the depreciation of the rupee from 185 to 372 against the dollar.
Petrol 95 increased from Rs. 160 to Rs. 450, a rise of 279%. Regular diesel rose from Rs. 104 to Rs. 400. It is therefore clear that one key reason for rising fuel prices was the depreciation of the rupee against the dollar. However, the current crisis is due to rising global fuel prices. From March 2 to March 18, Octane 92 petrol increased by 55%, Octane 95 by 65%, and diesel rose from Rs. 114 to Rs. 195, an increase of 74%.
Crude oil prices have increased from $81 to $114, a 40% rise. I will explain a simple formula to calculate oil prices: if oil prices increase by one dollar, our local fuel price increases by Rs. 2.00.
Now, prices have risen from $90 to $139, an increase of $49. Therefore, we can understand how much the rupee value would increase accordingly. Diesel has increased by $84, and when doubled, we can understand the corresponding increase in diesel prices.
You can ask exporters what price bunkering companies supply fuel to them. That will give you an idea of the market price. Since they import and supply it, you can observe the price. Therefore, it is not merely the depreciation of the rupee, but the rise in fuel prices that has significantly impacted us. Additionally, another issue has emerged.
We have awarded long-term tenders at a premium of around $2.5, generally below $3. However, the premium has now risen to around $40. Why is that? Suppliers seek security. There is competition among various countries and companies. Premiums have risen to $31, $35 and even $45. Therefore, consider the combined impact of rising global prices and increasing premiums on our fuel market. Consequently, countries worldwide have decided to increase fuel prices, with increases ranging approximately from 6% to 50%. In our country, the increase has been around 8% on average.
Globally, increases have reached up to 49%. Except for oil-producing countries, all others have raised fuel prices. We now face a pricing issue. The Ceylon Petroleum Corporation supplies 57% of our fuel. If it were the sole supplier, we could manage losses at times and profits at others.
However, 43% of the market is held by the private sector. Private companies state that unless they receive market prices, they will not import fuel. This is reasonable, as their losses per shipment could reach $55 million. No one will import fuel under such losses. If it were only the Petroleum Corporation handling the market, then we could have somehow managed it. We could have balanced it by selling fuel at a lower price when the world fuel prices were higher and set it off by selling fuel at a slightly higher price when the world fuel prices dropped and calculated the losses and profits at the end of the year. Therefore, private sector participation is essential, but they will only contribute if allowed to sell at cost-reflective prices. Therefore, I think we need to make a decision on the fuel prices very soon.
Under the current law, there is an issue. Companies have been allowed, through agreements, to set prices, but legally, the authority to determine maximum prices lies with the Petroleum Corporation. Although agreements have been made, the necessary legal amendments have not yet been enacted.
The Petroleum Corporation should determine the maximum price. However, agreements allow companies to set prices. We are closely examining this issue. If there is a price difference of Rs. 100–150 between the Corporation and private companies, consumers will avoid private suppliers.
A price gap of Rs. 100–150 could emerge. If that happens, consumers will not go to private suppliers and will instead queue at CPC stations for hours. Therefore, we must reduce this gap.
We also considered taxation. Monthly tax revenue from fuel is about Rs. 20 billion, with diesel alone generating Rs. 240 billion last year. In 2023, the Petroleum Corporation’s debt to the Treasury reached Rs. 884 billion. Even the annual interest alone amounts to around Rs. 100 billion. Therefore, a portion of tax revenue goes to the Treasury.
We are considering providing relief through taxes. However, some argue that tax relief benefits those who consume more fuel. Both IMF policy and our own policy emphasise targeted subsidies rather than general ones.
Fuel prices will follow market rates. Providing targeted relief to specific groups would be the best approach. However, delivering such relief is complex. For instance, it is possible to supply fuel to boats that formally depart from harbours, but there are many boats operating outside fishing harbours. How do we provide relief to them? Should relief also be given to those selling buns on the roadside? Where they are formally registered?
The informal economy is large and complex and there is a lack of reliable data. Therefore, it would be preferable, where possible, to provide relief to the formal economy. For example, assistance can be given to fishermen who are formally registered at fishing harbours. However, those whose livelihoods depend on the informal economy also require support. This makes the issue complicated and therefore, we are considering both aspects.
At the same time, we must also consider the next fuel price revision. That decision needs to be taken very quickly, because private companies are currently not supplying fuel against their orders, as they are not prepared to incur losses. The Petroleum Corporation can operate at a loss; we have experience of losses amounting to several hundred billion rupees. Therefore, we must make a decision on pricing. This is where the QR code system becomes important. If it had not been implemented by 1 April, people would have begun queuing and crowding at filling stations by around 27–28 March. That is why we began implementing the QR code system. It was not introduced by closing filling stations or by halting fuel supplies. As a result, it took a short period to become fully operational. The Ministry of Digital Economy now states that it is 100% complete.
Under the current situation, if anyone at filling stations is found to be issuing extra fuel illegally, legal action will be taken. Likewise, citizens have been advised to report and take action against anyone hoarding fuel. We will not allow a black-market economy to emerge. Our objective is to ensure an uninterrupted supply of energy.
If fuel prices are fully aligned with global market prices, the other side of our economy will contract. As a result, the tax revenue generated from that sector will decline. We currently receive around Rs. 20 billion per month from the fuel market. The question is whether we should offset this in order to protect revenue from other sectors, or whether we should make some adjustments to allow both sides of the economy to function effectively. This is something we must carefully consider before making a decision. We are reviewing the matter and will arrive at a final decision very soon.
Similarly, with regard to gas supply, the largest share of our market is supplied by Litro, which itself relies on a single supplier. There is also a private supplier in the market. Within this supply network, cartel-like structures had developed, not only in fuel and gas supply, but also in areas such as passport issuance and driving licences. In all these sectors, the same suppliers had been operating for twenty to thirty years. These arrangements had been established through the collaboration of state officials and companies, with the backing of political authorities. We are now dismantling these cartels.
As a result, what happens is this: the moment we begin to change the system, these cartels start reacting, even to the slightest disruption. They create outcries, often by paying others to do so. They spread misinformation through officials connected to them and make false narratives. They create issues around gas shortages, fuel shortages and even passport-related crises.
These cartels are tied to political movements. They influence media institutions, align themselves with illicit business networks and exert influence over state officials. That is the reality. However, we are dismantling these cartels. It is not easy, and it comes without the comfort that previously existed. But if we had not broken these cartels, there would be no gas supply today.
At the same time, we intend to diversify the supply network rather than rely on a single region. By sourcing supplies from multiple regions, we will be able to operate without disruption, regardless of crises that may arise in any particular region.
There is currently no issue regarding gas supply. We have secured the gas required for the month of March. However, a portion of it is still in floating storage facilities near the Maldives, while another portion is being unloaded from a vessel today. A further 33,000 metric tonnes required for April are also scheduled to arrive.
Therefore, to the extent that can currently be assessed, it is possible to avoid a gas crisis. However, there is a shortage in the market. This is because we have had to provide, as an additional supply, the 20% of gas that was previously supplied by a private company. That company’s highest profits came from supplying gas to industries and as a result, we now have to supply gas to those sectors as well.
That company had the right to import gas through the Export Development Board, but only 20% of the imported quantity could be released to the local market. However, they had not been importing over the recent period. Therefore, we opened up the market to them and also removed the restrictions on storage at the Hambantota terminal.
Our priority is not who imports the gas, but ensuring that there is no shortage within the country. We believe that we have taken all possible measures to maintain continuity in the energy supply chain. If the war continues for longer, further challenges may arise. However, we have planned ahead for the foreseeable future.
The year 2025 is when our country recorded strong economic indicators. Every government has attempted to keep the budget deficit below 5%. In 2015, a target of 6% was set, but it rose as high as 10.89%. However, by 2025, we were able to reduce the budget deficit to 2.4%. Every government has also tried to maintain a surplus in the current account, but this was achieved only on four occasions, each time with less than $500 million. In contrast, we have recorded a surplus of $1.8 billion, which is a significant factor for the economy.
A few years ago, our economy collapsed due to extremely unwise decisions. As a response to the crisis, money printing led to a rapid rise in inflation, which reached as high as 70%. Decisions taken under tax reforms created further complications. However, today we have been able to collect revenue very effectively. Tax revenue has increased to 15%, and total government revenue reached 17.5% in 2025. The last time a higher level of revenue was recorded was in 1996, at 21%. Therefore, by controlling inflation and maintaining bank interest rates at single-digit levels, we have demonstrated progress across multiple sectors of the economy.
During our debt restructuring process, the restructuring of SriLankan Airlines’ debt of $175 million had become an issue. We recently submitted the agreement for Cabinet approval, and it is being signed today. Our inability to proceed with debt restructuring also contributed to the downgrade of our ratings. We had reached an optimal level in the economy. If this situation had continued for another four to five years, we could have built an economy capable of withstanding any external or internal shocks.
However, Cyclone Ditwah struck and we managed to contain it. Now, we are facing an external shock once again. In this context, we are focusing on our supply chains. A committee has been established under the leadership of Minister Bimal Rathnayake, together with the Secretary to the Ministry of Trade, to oversee supply chain and economic operations. Plans have been made to stock essential food items required during the festive season, as well as to organise the distribution of goods. We have also planned how goods arriving in Pettah will be transported to rural areas. Similarly, we are considering how tea leaves from plantations will be transported to factories. Tea prices have not yet declined, but there is a possibility of issues arising in the future.
We are considering that. There has not yet been an issue in the apparel sector. However, the fuel crisis has affected all sectors. We have established a committee to gather information and take the necessary measures regarding potential issues in the fisheries and agriculture sectors. We will take the required decisions, but it is not possible to do everything at once; it will take a few days.
Next is the continuation of the public service. A committee has been appointed under the leadership of the Prime Minister to examine this. The public service bears a significant energy cost burden. Therefore, we have instructed ministries to reduce energy consumption by at least 25%. Steps are being taken to manage this aspect.
At the same time, the Minister of Foreign Affairs is engaging in discussions with other countries and intervening as necessary to help ease the situation. Likewise, the defence authorities, led by the Secretary to the Ministry of Defence, are taking action to safeguard our maritime boundaries. It has been stated that they have sufficient fuel reserves for two months.
During this period, we were able to seize 270 kilograms of cocaine. We will not allow the security network to collapse. Instructions have been given to maintain adequate security fuel stocks for ports and airports. In the health sector, even if fuel supplies were to run out within two months, we have stored an additional six weeks’ worth of reserve stocks to ensure the continued functioning of the healthcare system. Similar reserve stocks have also been provided to ports and airports.
In conclusion, while the economy has been progressing steadily, certain disruptions and challenges may arise. The high cost of energy will have an impact on some sectors. We are holding discussions, under the leadership of Ministers, with the relevant sectors to mitigate these impacts and provide relief to the public.
What we wish to say to the public is that, alongside this global crisis, a degree of uncertainty has emerged. However, we are making every possible effort to strengthen the supply chain reliably. The Cabinet, Ministry Secretaries and officials of the Petroleum Corporation have been working tirelessly, often without rest, for days on end for the sake of this country, not merely for their salaries, but out of a sense of responsibility.
Therefore, if there are any disruptions in supply or increases in fuel prices, we will work to manage and mitigate them. We ask for the support and cooperation of all citizens in this effort.
President’s Media Division (PMD)
20.03.2026
