Government warns private fuel companies over supply restrictions

The government will consider all available legal action against private fuel companies if they continue restricting supplies and inconveniencing consumers, Energy Minister Anura Karunathilaka said.

Speaking to the media in Gampaha, Karunathilaka said domestic fuel prices had not been increased by the same proportion as the rise in global oil prices.

He said the government had absorbed a substantial part of the increase through subsidies, allocating Rs. 57 billion previously and a further Rs. 41 billion for the next three months.

Karunathilaka said private fuel companies had also been asked to absorb part of the higher cost because the government did not want to pass the full increase on to consumers during the current economic difficulties.

However, he said some private filling stations had restricted fuel supplies in an apparent attempt to pressure the government into allowing higher prices.

“We are not prepared to allow fuel consumers to be inconvenienced by increasing prices in the way these companies are demanding,” he said.

Karunathilaka said the companies were entitled, under their agreements, to apply their own pricing formula and move towards cost-based pricing if they wished.

“But if they continue to restrict fuel supplies and inconvenience consumers, we are considering the legal measures available to us,” he said.

The minister said private fuel companies had originally been brought into the market on the basis that greater competition would benefit consumers.

Instead, he said, some companies were now exerting pressure for substantial fuel price increases.

Karunathilaka said the government did not intend to place investors in difficulty, but would also not allow consumers to be unfairly affected.

He added that when fuel prices had increased by Rs. 10, the government had in some cases absorbed around Rs. 70 through subsidies, arguing that the scale of state support was often overlooked in public discussion.