COLOMBO, April 7 (Xinhua) -- Sri Lanka will implement a three-month fuel subsidy program as cost-based estimates place diesel prices above 600 Sri Lankan rupees (about 2 U.S. dollars) per liter, President Anura Kumara Dissanayake announced in parliament on Tuesday.
The measure follows in response to the Middle East 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 per liter for diesel and up to 20 rupees per liter for petrol.
The subsidy program is expected to cost around 20 billion rupees per month, with a total allocation of 60 billion rupees 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 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. ■