Energy Minister Anura Karunathilake told Parliament on Tuesday that fuel queues should ease by Wednesday or Thursday, and put figures on how far the three private distributors have cut supply to the Sri Lankan market.
Measured against February, Lanka IOC has reduced its market release of auto diesel by 45%, Euro super diesel by 88% and petrol Octane 92 by 3%, the minister said. Sinopec has cut diesel by 66% and Octane 92 by 30%, EconomyNext reported.
The companies say they cannot sell at prevailing regulated prices. “All those companies are stating that they cannot sell at the prevailing market price in Sri Lanka. However, we do not have the ability to increase prices proportionately to that. In light of this, they have restricted the fuel released to the market,” Karunathilake said.
The state corporation is absorbing the gap
The arithmetic of who is now supplying the country has shifted sharply. The Ceylon Petroleum Corporation’s share of market supply has risen from 54% to 82%, the minister said. Against February, CPC has increased market releases of diesel by 28%, super diesel by 44%, Octane 95 by 7% and Octane 92 by 19%.
He also drew a commercial distinction between the two sets of suppliers: the private companies do not sell on credit, while CPC does, working on a three-day advance window. “Therefore, because this additional load is being absorbed by the Ceylon Petroleum Corporation, we believe and anticipate, Honourable Speaker, that this issue will ease to some extent by Wednesday or Thursday.”
What the government says it cannot do
Karunathilake was explicit about the limits of his powers under the distribution agreements. “Under these existing agreements, we have no power whatsoever to issue orders directing fuel stations to distribute fuel in a specific manner,” he said in response to opposition questioning. “What we are able to do is issue certain directives to maintain minimum fuel stock levels within Sri Lanka.”
Those directives have now been issued. Hiru News reported that the Secretary to the Ministry of Energy has written to all fuel companies instructing them to maintain the minimum stock levels required under their agreements.
NewsFirst named the official: Ministry Secretary G.M.R.D. Aponsu, who said the written directive instructs all fuel companies to adhere strictly to their agreements and to maintain the required minimum stocks. In the same report the Ceylon Petroleum Corporation said it is currently supplying 80% of the island’s daily diesel requirement — a figure from the corporation itself that sits close to the 82% share of overall market supply the minister gave Parliament, though the two are measured differently: the minister’s figure covers all fuels, CPC’s covers diesel alone. The minister said notices went to companies that had failed to do so last week, and that the Ministry Secretary notified the companies again on Monday to act in a way that avoids creating shortages.
Daily Mirror reported that queues lengthened on Tuesday because fuel distribution was suspended on Sunday, with some private companies limiting supplies over losses. The minister gave the same two causes to Parliament — the distributors’ restrictions, plus the normal Sunday halt in releases, with a knock-on effect into Monday.
This settles a dispute between two industry bodies
The minister’s account resolves a direct contradiction published a day earlier. On Monday the Ceylon Petroleum Private Tanker Owners Association said there was no shortage and urged the public to stop panic buying, attributing queues to individual stations failing to order on time. The Petroleum Dealers’ Association said the opposite on the same day — that Lanka IOC, Sinopec and R.M. Parks had restricted distribution because they were selling below cost.
The minister’s figures support the dealers’ account rather than the tanker owners’. The restriction is real, it is measurable, and it sits with the three distributors — not with late ordering by station operators.
Update, Tuesday evening — the CPC rules out a price rise, and a union says the shortage has returned
Two developments later on Tuesday bear directly on the minister’s forecast.
Ceylon Petroleum Corporation Chairman D.J. Rajakaruna told a press conference there will be no change in fuel prices until the end of this month, and said the corporation currently holds sufficient fuel reserves, Hiru News reported. That answers one of the questions left open below: a price revision is not on the table in the near term, which also means the commercial condition the private distributors cite as the reason for restricting supply is not about to change.
Hiru reported that signs indicating a lack of fuel were displayed at several private filling stations in Colombo and elsewhere in the island, with queues forming at some locations. It also records that journalists at Tuesday’s cabinet briefing asked Cabinet Spokesperson Minister Dr. Nalinda Jayatissa whether the International Monetary Fund has urged fuel prices to be adjusted to global market rates — a question the report does not say was answered.
Separately, the Sri Lanka Podujana Progressive Employees’ Union-Petroleum (SLPPEU-P) said the country is once again facing a fuel shortage, with motorists queuing for Lanka Auto Diesel and Lanka Petrol 92 Octane, the Daily Mirror reported. Chief Secretary Bandula Saman Kumara said motorists were being forced to obtain those two grades mainly from CPC-operated stations, said the government should take responsibility, and alleged it had failed to ensure adequate supply.
Two claims in that account do not hold together
Kumara said the CPC “had never incurred losses,” that it earned Rs. 28 billion in profit over the past eight years, and that it recorded a profit of more than Rs. 32 billion last year. The last two cannot both be true alongside the first: if a single year produced more profit than the whole eight-year period, the remaining seven years must net to a loss of roughly Rs. 4 billion.
The claim that the corporation has never made a loss is also contradicted by reporting from last week, in which the CPC was shown to be making a profit on petrol while losing money on diesel and kerosene. The union is an interested party in a dispute about pricing, and these figures should be treated as its assertion rather than as an audited account. No filing carries a CPC response to them.
The union escalates: abolish the private companies
Later on Tuesday the same union went considerably further, calling on the government to abolish private petroleum companies operating in Sri Lanka if they fail to ensure a fair fuel supply to the public, the Daily Mirror reported.
Kumara’s argument rests on a claimed asymmetry in how the private distributors behave around a price revision:
“Whenever fuel prices are increased, these companies have no difficulty selling their stocks. But when the Government announces a lower or break-even price, their sales slow down.”
Under the pricing mechanism, revised prices take effect on the first day of each month, and both the CPC and the private companies are required to sell existing stocks at the revised price. Kumara said the private companies’ required stocks had already been stored at Kolonnawa and Sapugaskanda before the revision, and that they were therefore obliged to release those stocks at the new prices.
He also turned the original rationale for privatisation against the companies. Private participation was introduced to reduce the country’s foreign exchange burden, he said — but the effect is the reverse when supply is restricted:
“Private petroleum companies were allowed to sell fuel in the local market and make profits. However, when they slow down their sales, the CPC has to spend more foreign exchange to import additional fuel to fill the gap. These companies do not spend their own money to bring the required fuel into the country.”
Multinational operators were focused on maximising profits and repatriating them, he said, calling it “an impractical situation for Sri Lanka” in which “ultimately, it is the people who have to suffer.” The union wants the government to reconsider the private companies’ presence in the local market and let the CPC supply consumers directly, offering concessions where needed.
The same credibility caveat applies: this is a demand from a trade union that is a party to the dispute, its figures in the preceding section do not reconcile, and no filing carries a response from Lanka IOC, Sinopec, R.M. Parks or the Energy Ministry to the abolition call. It is also a notably larger claim than the one the minister’s own figures support — he described a measurable supply restriction by three distributors, not a case for removing them from the market.
What this means for the forecast in the headline
The minister’s expectation that queues would ease “by Wednesday or Thursday” was given to Parliament on Tuesday afternoon. By Tuesday evening a trade union was describing the shortage as having returned and Hiru was reporting queues still forming. That forecast has not yet been overtaken — the window he gave has not closed — but the situation at the point of writing is not improving, and the two accounts of Tuesday’s conditions are hard to reconcile with each other.
Not reported
Neither filing gives a figure for how many stations were affected, nor current national stock levels. R.M. Parks is named in the dealers’ account but the minister’s published figures cover only Lanka IOC and Sinopec, and no reduction percentage has been given for it. None of the three companies has responded publicly. The minister referred to notices issued last week “specifically to X company” without the company being named in the reporting, and no filing says what happens if the Wednesday-or-Thursday expectation is not met. Whether a price revision is under consideration — answered: the CPC chairman says prices will not change until the end of October. Still open: whether the IMF has pressed for market-based pricing, which was put to the Cabinet Spokesperson on Tuesday without a reported answer, and whether the CPC disputes the union’s profit figures.
