Sri Lanka To Roll Out Fuel Subsidy As Cost-based Diesel Price Soars

COLOMBO, April 7 (Bernama-Xinhua) -- Sri Lanka will implement a three-month fuel subsidy programme as cost-based estimates place diesel prices above 600 Sri Lankan rupees (about US$2) per litre, President Anura Kumara Dissanayake announced in parliament on Tuesday, reported Xinhua.

The measure follows in response to the West Asia crisis, which has affected several sectors of the economy.

Fuel and energy were identified as key areas of pressure, with rising costs directly impacting daily life and economic activity.

Fuel prices will continue to be adjusted based on cost-reflective pricing from early May, using data from the preceding month.

To cushion the impact, the government will provide a subsidy of up to 100 rupees (US$0.32) per litre for diesel and up to 20 rupees (US$0.06) per litre for petrol.

The subsidy programme is expected to cost around 20 billion rupees (US$63.2 million) per month, with a total allocation of 60 billion rupees (US$189.6 million) over three months.

Authorities have opted to maintain the existing tax structure and finance the subsidy through the treasury, instead of allowing prices to fully adjust to market levels.

Other relief measures include support for electricity consumers using less than 90 units.

The government has allocated 15 billion rupees (US$47.4 million) to absorb higher generation costs driven by increased fuel prices and greater reliance on thermal power due to prevailing dry weather conditions.

The president outlined that the government had considered allowing fuel prices to fully align with market rates to reduce financial pressure on state institutions, but opted instead for a subsidy mechanism to balance fiscal constraints with the impact on households, businesses and the economy.

Earlier, Sri Lanka's cabinet had approved a fuel subsidy for fishing boats to ease pressure on the country's fisheries sector amid rising global fuel prices, the Fisheries Ministry said on Tuesday.

The ministry said the subsidy will take effect from April 20.

Under the scheme, small fishing boats will receive 50 rupees (about US$0.17) per litre of fuel, while multi-day fishing vessels will receive 150,000 rupees (US$474) per voyage.

The decision followed a special discussion on Sunday about the severe difficulties facing Sri Lanka's fisheries sector due to higher global fuel prices and disruptions to fuel supplies linked to tensions in West Asia, the ministry said. 

-- BERNAMA-XINHUA