The Ceylon Petroleum Corporation (CPC) has informed the Committee on Public Finance (CoPF) that government fuel subsidies are expected to come to an end this month. However, CPC officials clarified that authorities have not yet taken any decision regarding a possible fuel price increase.
CPC officials responded to questions raised by CoPF Chairman Dr. Harsha de Silva, who sought clarity on the country’s fuel pricing mechanism and recent market developments. He questioned how the CPC manages foreign exchange purchases amid recent volatility in the currency market and noted that there were public claims suggesting the corporation may have contributed to the instability.
No Final Decision on Fuel Price Revision.
Officials confirmed that the government has not approved any fuel price revision at this stage. They also highlighted that discussions continue as authorities assess the impact of global oil prices and domestic economic conditions. The CPC stressed that it continues to follow existing pricing mechanisms while awaiting further policy direction from the government.
The disclosures come shortly after President Anura Kumara Dissanayake indicated in May that the government is reviewing several measures to reduce fuel consumption, including possible adjustments to fuel pricing. He explained that rising global crude oil prices have significantly increased domestic costs, pushing the real price of a litre of diesel to around Rs. 720.
Government Subsidy and Financial Pressure on CPC.
According to the President, the government currently subsidises nearly Rs. 100 per litre of diesel to maintain the retail price at Rs. 392 for consumers. He also noted that this subsidy structure places continued financial pressure on the CPC, contributing to ongoing operational losses.
Energy sector analysts warn that ending subsidies could lead to significant changes in fuel pricing and may affect transport costs and overall inflation. They say the government will likely face difficult policy choices between maintaining price stability and reducing fiscal burden.
