Private fuel distributors operating in Sri Lanka have restricted diesel supplies to filling stations amid mounting losses following the expiry of a Government fuel subsidy, although authorities have assured that the country has adequate stocks.
Lanka IOC, Sinopec and RM Parks have reportedly reduced the quantities of diesel supplied to their filling stations, while the Ceylon Petroleum Corporation (CPC) continues distribution as usual.
Petroleum Dealers’ Association Executive Committee Director Shantha Silva told BBC Sinhala that the three private fuel companies were facing substantial losses and were therefore supplying filling stations with limited quantities of diesel.
According to Silva, filling stations previously received the quantities they ordered, but private suppliers are now delivering less than the amounts requested.
He said the situation was also worsening financial losses faced by fuel dealers. While an immediate nationwide diesel shortage was not expected, consumers could experience difficulties obtaining diesel at certain filling stations from time to time, he cautioned.
The development follows the expiry in June of a three-month fuel subsidy introduced by the Government in April to cushion the impact of rising global fuel prices amid conflict in the Middle East.
Under the scheme, the Government provided a subsidy equivalent to Rs. 100 per litre of diesel and Rs. 20 per litre of petrol, allocating Rs. 57 billion for the programme.
CPC Chairman D.J. Rajakaruna, however, dismissed concerns of a diesel shortage, saying sufficient stocks were available in the country.
“Diesel is available in the country. The issue is that they are not supplying it to the sheds,” Rajakaruna told BBC Sinhala, referring to the private operators.
He said the companies themselves had fuel stocks but were limiting distribution because of losses, supplying, for example, only half of what they would previously have released.
Rajakaruna said the CPC was capable of responding to the situation, while measures that could be taken if supplies declined in particular areas were being considered at the ministerial level.
Meanwhile, Energy Ministry Secretary Russell Aponsu said private fuel companies were not permitted under their agreements with the Government to restrict fuel distribution in this manner.
He said the Ministry had received reports of reduced supplies at several locations and intended to remind the companies that they were required to maintain the minimum fuel stocks stipulated under their agreements.
Aponsu added that the Government had not yet decided whether to extend the three-month fuel subsidy.
He also noted that if private suppliers were unable to sell fuel at the prices determined by the CPC, they had the option of selling at competitive prices.
