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Sri Lanka has recently altered its fuel pricing formula, transitioning from a fixed profit margin system to one that allows flexibility for retailers to set their profit margins between 0-4%. This adjustment, announced by State Power and Energy Minister D V Chanaka, aims to mitigate potential fuel price increases while maintaining stability in the market. The decision comes in anticipation of the upcoming presidential election, recognizing the significance of stable fuel prices as a political metric and the historical impact they have had on governing administrations.
This shift in fuel pricing methodology reflects a broader trend in Sri Lanka's energy policy, where the government seeks to balance the imperative of political popularity through subsidized fuel prices with the financial sustainability of state-owned petroleum companies like the Ceylon Petroleum Company (CPC) and Ceylon Electricity Board (CEB). The move acknowledges the challenges posed by previous fuel price hikes and shortages, signaling a strategic departure from past practices. By allowing for flexible profit margins, the government aims to navigate the delicate balance between economic viability and public sentiment, particularly in the context of impending political contests.
