Sri Lankan fuel retailer raises prices by up to 12%

COLOMBO • One of Sri Lanka's biggest fuel suppliers raised its prices by as much as 12 per cent yesterday, as the cash-strapped island's energy crisis worsened.

Lanka IOC, a fuel retailer which accounts for a third of the market, said it was increasing prices for diesel - commonly used by public transport - by 12 per cent, and for petrol by 11 per cent.

The increases came after a 7 per cent price rise three weeks ago and will add to the upward pressure on inflation, already at a record high.

The island is in the grip of an economic crisis after the tourism sector, a key foreign-exchange earner, collapsed in the wake of the Covid-19 pandemic.

The government imposed a broad import ban in March 2020 in an effort to save foreign currency.

The country is now suffering widespread shortages, including of fuel, electricity, automotive parts and cement, with supermarkets forced to ration staple foods such as rice, sugar and milk powder.

The shortages pushed food inflation to 25 per cent last month, with overall inflation at 16.8 per cent.

There was no immediate energy price revision by the state-run Ceylon Petroleum Corp (CPC), but most of its pumps have been out of fuel for days.

Energy Minister Udaya Gammanpila announced last week that he expected fuel shortages to ease in days, but warned that a sharp price increase was necessary to retain the viability of the loss-making CPC.

AGENCE FRANCE-PRESSE