Fuel queues have reappeared in Colombo after private fuel operators sharply cut their supply to the domestic market, Energy Minister Anura Karunatilaka told Parliament, saying the companies are losing money under the government’s regulated pricing structure.
The minister named Lanka IOC, Sinopec and RM Parks as the operators restricting supply. “All those companies are stating that they cannot sell at the prevailing market price in Sri Lanka,” he said, adding that the government has no ability to raise prices in proportion to the increase in costs. In response, he said, the companies have restricted the fuel they release to the market.
Karunatilaka put figures on the cutbacks, comparing current levels to February. Lanka IOC has reduced its market release of auto diesel by 45 percent and Euro super diesel by 88 percent, with Octane 92 petrol down 3 percent. Sinopec has cut diesel by 66 percent and Octane 92 by 30 percent.
The shortfall has landed on the state-owned Ceylon Petroleum Corporation (CPC), whose share of market supply has risen from 54 percent to 82 percent. Compared with February, CPC has increased market releases of diesel by 28 percent, super diesel by 44 percent, Octane 95 by 7 percent and Octane 92 by 19 percent.
Pressed by the opposition on what the government can do, the minister conceded its hands are largely tied. Under the existing agreements, he said, the government has no power to order fuel stations to distribute fuel in a specific manner. What it can do is issue directives requiring companies to maintain minimum fuel stock levels.
He said notices were issued last week to companies that had failed to do so. With shortages now visible, the Ministry Secretary notified the companies yesterday to act in a way that avoids creating shortages in the market.
Karunatilaka also pointed to timing as a factor in the past two days. Fuel is generally not released to the market on Sundays, he said, and that had a knock-on effect on Monday as well.
Another sore point is credit. According to the minister, private companies do not supply fuel on credit, while the CPC does, allowing a three-day advance window. Because the CPC is absorbing the additional load, he said the government expects the situation to ease to some extent by Wednesday or Thursday.