Sri Lanka raises fuel prices by 25% as Iran war bites

COLOMBO – Sri Lanka raised fuel prices by 25 per cent on March 22, the second increase in two weeks, as the country prepared for more impact from the war in the Middle East.

Regular petrol was increased to 398 rupees (S$1.60) per litre, up from 317 rupees, while diesel, the fuel commonly used for public transport, rose by 79 rupees to 382 rupees.

Last week, the government ordered an 8 per cent increase in retail fuel prices and introduced rationing to limit consumption.

“We hope to achieve a 15 per cent to 20 per cent reduction in fuel consumption with the latest increase,” an official at the Ceylon Petroleum Corp said.

He added that Sri Lankan President Anura Kumara Dissanayake told them last week that the country must prepare for a prolonged conflict in the Middle East that could affect the island’s energy supplies.

The President ordered a four-day work week from March 18 and asked employers to reintroduce work-from-home arrangements where possible.

The Strait of Hormuz, a key waterway through which about 20 per cent of global oil exports pass in peacetime, has been effectively closed by Iran in retaliation for the US and Israeli war against it, now entering its fourth week.

Sri Lanka imports all of its oil and also buys coal for electricity generation.

The island buys refined petroleum products from Singapore, Malaysia and South Korea, while crude oil for its Iran-built refinery is sourced from the Middle East.

The government has warned that the fighting in the Middle East and a prolonged war could seriously undermine its efforts to emerge from the economic meltdown of 2022.

Sri Lanka defaulted on its US$46 billion (S$59 billion) foreign debt in 2022 after the country ran out of foreign exchange. Since then, Colombo has secured a US$2.9 billion International Monetary Fund bailout. AFP