By P. Karunakharan
Colombo, May 25 (IANS) With global oil prices soaring, Sri Lanka announced a dramatic hike in the prices of petrol and diesel by Rs.30 a litre and of kerosene by Rs.10 a litre from midnight Saturday. Auto diesel will now cost Rs.110 a litre and super diesel Rs.125. The price of 90 octane petrol has gone up from Rs.127 to Rs. 157 a litre while the 95 octane petrol will now cost Rs.170.

“The decision to increase the fuel prices was taken after an urgent cabinet meeting presided over by President Mahinda Rajapaksa Saturday night. The cabinet approved the fuel price hike as the government cannot incur the huge losses caused by fuel subsidy any more,” a presidential spokesman told IANS.

Rajapaksa earlier met finance ministry officials, transport authorities and business entrepreneurs and discussed the “inevitable fuel price hike, its impacts and ways to cushion the impact on the consumers”.

He said the president instructed the ministers and MPs “to control the usage of fuel as it was found out that most of the ministries, government departments and institutions are consuming unlimited amount of petrol and diesel unnecessarily”.

Prices are expected to go up in a number of areas, including transport fares, as a result of the price increases.

Gemunu Wijeratne, president of the Private Bus Owners Association, said they were holding talks with the petroleum and transport ministers, demanding at least a 30 percent increase in the public transport fares.

This is the ninth time Sri Lanka has increased the fuel prices since January 2007 and the second time since January 2008.

Many Sri Lankans, already struggling under the spiralling cost of living, expressed shock and dismay over the massive fuel price hike.

Following the price increase by the Ceylon Petroleum Corp (CPC), the Lanka Indian Oil Corp also (LIOC) announced a hike in prices.

LIOC managing director K. Ramakrishnan said the price increase “was very much warranted” because the price of a barrel of diesel reaching $140 and petrol touching $175 in the world market.

“It is a painful exercise, but there is no option. It will not be a surprise if the local fuel prices reach 200 rupee mark by the end of this year,” he said.

He said although there were calls for the public to reduce the consumption fuel, Ramakrishnan said that it would be “impossible for a growing economy like Sri Lanka to reduce the consumption of fuel products”.

The LIOC, which has 153 retail outlets throughout Sri Lanka, holds 19 percent of the market share in distributing fuel products.

On an average, LIOC sells 15 million litres of petrol and 30 million litres of diesel in Sri Lanka while CPC sells 45 million litres of petrol and 170 million litres of diesel per month.

Annually Sri Lanka consumes not less than four million tonnes of fuel products, all of which it imports.