Sri Lanka’s government announced a 25 percent increase in fuel prices Sunday, the second such hike in as many weeks, as the island nation grapples with escalating difficulties securing hydrocarbon supplies amid the ongoing conflict in the Middle East.
Following an initial 8 percent price increase earlier this week, the latest decree raises the price of 92-octane gasoline to 398 Sri Lankan rupees (approximately $1.30 USD) per liter and diesel to 382 rupees ($1.25 USD), according to officials.
Sri Lanka imports 100 percent of its petroleum needs, as well as coal for electricity generation. In an effort to curb consumption and conserve dwindling reserves, the government has implemented fuel rationing and a four-day work week. A Ceylon Petroleum Corporation official, speaking on condition of anonymity, stated the price increases are intended to reduce fuel consumption by 15 to 20 percent.
President Anura Kumara Dissanayake has reportedly communicated to sector officials his expectation of a protracted conflict in the Middle East, the official added. The government has warned that the war threatens to undermine its economic recovery efforts following the financial crisis of 2022.
That year, the depletion of foreign exchange reserves forced Sri Lanka to ration food, fuel, and medicine, triggering a severe recession and widespread social unrest. Violent protests led to the resignation of then-President Gotabaya Rajapaksa.
The International Monetary Fund (IMF) approved a $2.9 billion emergency loan to Sri Lanka a year later, contingent upon the implementation of stringent austerity measures. The ongoing fuel crisis adds further strain to the nation’s fragile economic situation.
The situation in Sri Lanka mirrors challenges faced by other nations in Asia, with Thailand also implementing fuel rationing measures in response to disruptions in supply and rising oil prices linked to the Middle East conflict, according to reports. The war is threatening the petroleum and gas supply to Asian countries, according to Radio France Internationale.
The Sri Lankan government has also requested that owners of electric vehicles refrain from charging them overnight to avoid straining the power grid, which relies heavily on coal and diesel-fired power plants. Electric vehicles account for more than 10 percent of Sri Lanka’s vehicle fleet, a figure that has increased since a five-year ban on vehicle imports was lifted last year.
Travel to Sri Lanka remains possible, though routes are being disrupted. Hubs in Dubai and Doha, key transit points for travel between Europe and Asia, are experiencing closures and significant disruptions, forcing travelers to seek alternative routes. The Sri Lankan government maintains that the country itself is safe and accessible, despite the altered travel landscape.
