📈 Fuel Import Costs Surge: Structural Gap Threatens Energy Stability

Sri Lanka’s energy sector faces severe strain as global supply disruptions and rising freight costs push fuel landed costs far beyond domestic retail prices. • Overall Impact: The landed cost of diesel is approaching US$ 350 per barrel due to a spike in supplier premiums and freight, which have jumped from US$ 5 to US$ 60 per barrel. • Pricing Gap: Domestic diesel prices currently lag behind costs by over Rs. 280 per litre, creating a massive subsidy burden and risking supply continuity. • Refinery Constraints: The 60-year-old local refinery remains limited by its design for Iranian crude; recent Middle East disruptions and sourcing delays have led to operational shutdowns. • Financing Burden: The capital required for a standard 40,000-tonne fuel shipment has more than doubled, rising from approximately US$ 30 Mn to US$ 70 Mn. • Sector Risks: Experts warn that if pricing is not aligned with economic costs, importers may struggle to sustain shipments, impacting transportation and manufacturing sectors that rely on stable energy inputs. • Governance: A complaint has been filed with CIABOC by the Joint Opposition alleging procurement irregularities and financial losses related to diesel import premiums. _Source: Based on provisional industry data and former CPC executive statements._