Update, 1 October. The CPC Chairman has since given October figures that reverse the projection made later in this article. Our extrapolation held August import costs constant; they did not hold. See CPC says it sells diesel Rs. 136 below cost. The Petrol 95 price discrepancy noted below has also now been resolved. Both points are set out at the end.
The Ceylon Petroleum Corporation was earning a margin on both petrol grades while selling diesel and kerosene below cost, according to its pricing structure for imported refined petroleum products for August 2026, reported by the Daily Mirror.
The disclosure is a rare public view of the cross-subsidy inside Sri Lankan pump prices: motorists buying petrol are covering part of the cost of diesel and kerosene.
The August margins
| Product | Formula-based cost | Retail price | Margin |
|---|---|---|---|
| Petrol 92 | Rs. 398.70 | Rs. 414.00 | +Rs. 15.30 |
| Petrol 95 | Rs. 448.56 | Rs. 495.00 | +Rs. 46.44 |
| Lanka Auto Diesel | Rs. 428.88 | Rs. 382.00 | −Rs. 46.88 |
| Lanka Super Diesel | Rs. 508.59 | Rs. 478.00 | −Rs. 30.59 |
| Kerosene | Rs. 298.51 | Rs. 285.00 | −Rs. 13.51 |
All figures are per litre. Petrol 95 carries the largest positive margin and Lanka Auto Diesel the largest shortfall — the two products sitting almost exactly Rs. 46 either side of cost.
Kerosene, used for cooking and lighting in lower-income and fishing households, is the smallest shortfall in rupee terms but is sold below cost as a matter of long-standing policy.
These are August prices, and diesel has since gone up
The retail prices in the table are the ones that were in force through August, when CPC left prices unchanged for the month. They are not today’s.
On 30 September the CPC raised Auto Diesel by Rs. 10 to Rs. 392 and Super Diesel by Rs. 50 to Rs. 528, leaving Petrol 92 at Rs. 414 and kerosene at Rs. 285.
Holding August’s formula costs constant — which they will not be, since import costs move monthly — those increases change the picture materially:
- Auto Diesel’s shortfall narrows from Rs. 46.88 to about Rs. 36.88 a litre.
- Super Diesel moves from a Rs. 30.59 loss to a margin of roughly Rs. 19.41 a litre.
- Petrol 92 and kerosene are unchanged.
That is an arithmetic illustration using August costs, not a CPC figure for October. But it indicates that the steepest of last week’s increases — the 10.5% rise on Super Diesel — did more than close a gap. It is the detail that explains why the product left outside the government’s diesel relief package was the one raised hardest.
One figure that does not reconcile
The Daily Mirror gives the Petrol 95 retail price as Rs. 495. LankaNewz’s own record of the 30 September revision puts Petrol 95 at Rs. 475, unchanged before and after. The Rs. 20 difference is not explained in any of the reporting, and it is the single figure in the table that cannot be matched against the published pump prices. The Petrol 95 margin above should be read with that caveat.
Why the cross-subsidy matters
Sri Lanka has committed to market-reflective fuel pricing under its International Monetary Fund programme, which in principle means each product recovering its own cost. A structure in which petrol runs Rs. 15 to Rs. 46 above cost while diesel runs Rs. 30 to Rs. 47 below it is not market-reflective product by product — it is reflective in aggregate at best.
Diesel is the fuel of freight, buses and agriculture, so under-recovery there is a deliberate cost-of-living choice. The Cabinet reinforced it on 29 September by approving a Rs. 40.65 billion diesel relief programme running from October to December.
Not reported
The Daily Mirror does not say what volumes were sold at each margin, so the table cannot be converted into a net profit or loss for the corporation. It does not give the components of the formula-based cost, state whether the figures include taxes and levies, or say whether CPC published the disclosure itself or it was obtained.
Update, 1 October: the extrapolation above was wrong, and why
CPC Chairman D.J. Rajakaruna has since set out the corporation’s October position directly. His figures do not resemble the projection made above:
| Product | Projected above | Chairman’s October figure |
|---|---|---|
| Auto Diesel | −Rs. 36.88 | −Rs. 136 |
| Super Diesel | +Rs. 19.41 | −Rs. 53 |
| Petrol 92 | +Rs. 15.30 | −Rs. 32 |
The direction is reversed on two of the three. On the chairman’s account the CPC is now selling all of its main products below cost, not cross-subsidising diesel out of petrol.
The reason is the assumption this article flagged as the one it could not hold: import costs. Rajakaruna says the crude Sri Lanka buys rose from about USD 69 to USD 115 a barrel measured against February. Holding August costs constant understated the gap by roughly Rs. 100 a litre on diesel.
The August table remains an accurate record of the August position, and the cross-subsidy it documented was real at the time. It is the forward projection that did not survive contact with October’s import costs — and it was explicitly labelled an arithmetic illustration rather than a CPC figure. The current picture is in the 1 October report.
Update: the Petrol 95 discrepancy is resolved
The Rs. 495 Petrol 95 price flagged above as unmatchable appears to be a Daily Mirror error. NewsFirst, reporting the 30 September revision in full, gives Octane 95 Euro 4 as Rs. 475, unchanged, matching LankaNewz’s own record. Taking Rs. 475 against the Rs. 448.56 formula cost, the Petrol 95 margin for August was about Rs. 26.44 a litre, not Rs. 46.44.
That narrows the cross-subsidy the August table showed, though it does not eliminate it.
