Minister Nalinda Explains Reasons Behind Sudden Fuel Price Increase in Sri Lanka
The Sri Lankan government has revealed the reasons behind the sudden increase in fuel prices, citing rising global oil prices and an unexpected surge in domestic consumption. The explanation was provided by Minister Nalinda Jayatissa during the Cabinet media briefing held on Monday (10), where he addressed growing public concern over the latest price revision.
Although the government had previously assured the public that the country possessed sufficient fuel reserves, the minister clarified that several developments in recent weeks made a price adjustment unavoidable.
Surge in Fuel Consumption
Minister Jayatissa stated that fuel consumption in Sri Lanka had risen sharply above normal levels during the past several days. This unexpected spike significantly reduced the country’s existing fuel reserves, forcing the government to place urgent new orders for fuel imports.
“Over the past few days, fuel consumption in the country has increased beyond the usual average,” the minister said. “As a result, a portion of the reserves we had maintained has been depleted. To meet the country’s ongoing demand, the government had to place new orders for fuel shipments.”
According to the data presented at the briefing, Sri Lanka normally consumes around 4,000 metric tons of diesel per day, while petrol consumption is typically lower.
However, statistics from March 1 to March 9 indicate a sharp jump in usage. During that period:
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Diesel consumption reached 59,200 metric tons
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Petrol consumption reached 47,500 metric tons
This means that in just nine days, the country consumed approximately 23,000 metric tons more diesel and 13,000 metric tons more petrol than the typical consumption pattern.
Officials believe this sudden increase in demand rapidly drained the existing fuel stockpiles that had been previously secured.
Impact of Global Oil Prices
Another key factor behind the price revision is the surge in global crude oil and refined petroleum prices.
Minister Jayatissa noted that international crude oil prices have risen by approximately 37.76 percent. Meanwhile, refined fuel products have seen even sharper increases in global markets.
According to the figures he disclosed:
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Auto Diesel prices increased by about 99.99 percent
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Super Diesel increased by 99.6 percent
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92 Octane Petrol increased by about 75 percent
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95 Octane Petrol increased by roughly 79 percent
These increases in global energy markets directly influence the cost at which Sri Lanka can purchase fuel shipments.
The minister explained that when Sri Lanka orders fuel cargoes, the final price is calculated based on the average international market rate two to three days before the shipment is unloaded.
“As we place orders and receive shipments, the pricing is determined based on the global market average during the few days prior to the delivery,” he said. “Because global prices have risen sharply, the fuel arriving now is significantly more expensive than earlier shipments.”
Need to Maintain Supply Stability
The government also warned that failing to adjust retail fuel prices could disrupt the country’s supply chain.
Sri Lanka’s fuel market currently includes both state-owned suppliers and private importers. According to the minister, if the domestic selling price does not reflect international costs, private companies may reduce imports or halt them entirely.
“If we had not revised the prices, private companies would have reduced or stopped importing fuel,” he explained. “That would have created serious supply shortages in the country.”
Officials stressed that maintaining a stable supply of fuel remains the government’s top priority, particularly as Sri Lanka continues its fragile economic recovery following the severe financial crisis of recent years.
Depletion of Existing Reserves
The minister acknowledged that the sharp rise in consumption played a decisive role in exhausting available reserves more quickly than anticipated.
“The situation we faced was that our existing stocks were nearly exhausted due to the sudden surge in demand,” he said. “Therefore we had to bring in new shipments, and those shipments were purchased at higher international prices.”
This combination of depleted reserves, increased global prices, and urgent new imports ultimately forced the government to revise fuel prices.
Gradual Adjustment Rather Than Large Increase
Despite the significant increase in global fuel costs, the government chose not to pass the full price increase on to consumers at once.
Minister Jayatissa explained that implementing the entire price adjustment in a single step would place an unbearable burden on the Sri Lankan economy and the public.
“The actual price increase required is much higher,” he said. “But introducing such a large increase at once would be extremely difficult for the economy to absorb. Therefore the government decided to increase prices only to a certain extent.”
The current adjustment is therefore intended as a partial correction, rather than a full reflection of global market prices.
Encouraging Responsible Fuel Use
The government also hopes the price increase will help moderate excessive fuel consumption.
Authorities believe that the sudden spike in demand during the past week may have been partly driven by precautionary buying or speculation about possible shortages.
By adjusting prices, policymakers expect that consumers and businesses will adopt more measured fuel usage patterns.
“We also expect that the public will limit fuel consumption to a reasonable level during this period,” the minister said.
Balancing Economic Pressures
Sri Lanka’s energy pricing policy has been under close scrutiny since the country’s economic crisis forced sweeping reforms in fuel imports, pricing mechanisms, and energy subsidies.
The government now attempts to balance three competing priorities:
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Ensuring uninterrupted fuel supply
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Managing the financial stability of state energy institutions
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Minimizing the economic burden on consumers
Officials say the latest price revision reflects an attempt to maintain this balance in the face of rapidly changing global energy prices.
Looking Ahead
Energy analysts note that Sri Lanka remains heavily dependent on imported fuel, making it vulnerable to international market fluctuations.
As long as global crude oil prices remain volatile, domestic fuel prices may continue to experience adjustments under the country’s fuel pricing formula.
For now, the government insists that the price increase was unavoidable given the combined pressures of rising global prices, unexpectedly high local consumption, and the need to secure new fuel supplies.
Minister Jayatissa concluded by reiterating that the government’s priority remains maintaining stable fuel availability across the island while safeguarding the broader economic recovery.