Government Justifies Fuel Hike With Spike in Consumption and Global Volatility

COLOMBO (News 1st); Sri Lanka’s Cabinet Spokesman, Dr.Nalinda Jayatissa, says the recent fuel price hike was implemented at a lower level than required because the economy could not withstand a sharper increase. 

He said the decision was taken while balancing two priorities: controlling consumption and preventing severe economic strain.

Dr. Jayatissa said the Ministry of Finance is reviewing global market conditions, including rising prices for refined and crude oil, to explore possible short‑term relief. However, he emphasized that any such relief must be structured to avoid placing unnecessary pressure on the economy. He noted that even though global prices fell to USD 94–95, several forecasts indicate prices may again exceed USD 100 soon.

He pointed out that several countries with larger storage capacities and domestic oil reserves have also increased fuel prices — including Pakistan by 21%, Vietnam by 19%, the United States by 13%, New Zealand by 12%, and Ukraine by 10%. According to him, these adjustments were also driven by the ongoing Middle East conflict and heightened volatility in international markets.

Presenting local consumption data, he noted a sharp rise in usage:

Lanka Auto Diesel Consumption:
March 1 – 3,939 kl
March 2 – 10,321 kl
March 3 – 9,845 kl
March 4 – 9,962 kl
March 5 – 8,511 kl
March 6 – 8,442 kl
March 7 – 9,816 kl

Petrol Consumption:
March 1 – 5,461 kl
March 2 – 11,701 kl
March 3 – 10,292 kl
March 4 – 9,111 kl
March 5 – 7,398 kl
March 6 – 6,253 kl
March 7 – 7,590 kl

“These figures show a significant spike in consumption,” Dr. Jayatissa said. “When global prices rise and local usage rises, the impact on our dollar reserves becomes severe. The price increase was necessary to manage both.”

Dr. Jayatissa said uninterrupted fuel supply is critical because tourism, transportation, production, and electricity generation all depend on it. The government’s objective, he said, is not to exhaust existing stock and then raise prices, but to ensure long‑term stability by encouraging reduced consumption now.

He said the QR system did not reduce consumption but was only a distribution tool that eliminated long queues and panic buying. 

“According to the numbers, QR did not reduce usage,” he noted.