As Sri Lankans wait for fuel prices to reflect declining global oil markets, another controversy has emerged whether the Ceylon Petroleum Corporation’s foreign exchange management practices are contributing to economic pressures that ultimately affect consumers.
The issue was thrust into the spotlight when Parliament’s Committee on Public Finance (CoPF) Chairman Dr. Harsha de Silva questioned the CPC’s handling of its dollar requirements. His concern centred on reports that the State-owned fuel importer purchased approximately US$46 million in a single day on May 29, raising questions about the impact such transactions could have on Sri Lanka’s foreign exchange market.
According to Dr. de Silva, large and concentrated purchases of foreign currency risk creating unnecessary volatility. When a major State institution enters the market seeking tens of millions of dollars at once, demand can spike suddenly, potentially affecting exchange rate stability and crowding out other market participants.
His criticism focused not merely on the purchase itself, but on treasury management practices. The CoPF Chairman argued that a smoother and more predictable acquisition strategy would reduce pressure on currency markets while improving financial planning.
CPC officials responded by assuring lawmakers that the Corporation has already begun moving toward a structured purchasing framework. Rather than making large one-off purchases, future foreign currency requirements will be spread across multiple days. Officials disclosed plans to acquire roughly US$11 million per day through auctions conducted among nine commercial banks.
The Corporation’s defence highlights the extraordinary circumstances it faced during the recent energy crisis. Prior to April, Sri Lanka’s monthly fuel import bill averaged around US$100 million. However, escalating geopolitical tensions and surging oil prices caused that figure to exceed US$500 million in a short period, forcing urgent adjustments to procurement strategies.
However this debate over foreign exchange management intersects with the broader question of why fuel prices remain stubbornly high despite falling global crude prices.
The answer lies in the interaction between procurement costs, subsidies and currency management. Fuel imports purchased during the height of Middle Eastern tensions carried significant risk premiums, meaning Sri Lanka is still consuming stocks acquired at elevated prices. Simultaneously, the Government’s Rs. 57 billion fuel relief programme is nearing its conclusion.
Officials suggest that any savings generated from lower international oil prices will largely be absorbed by the withdrawal of these subsidies. This balancing act is expected to prevent both price reductions and price increases when the monthly pricing formula is reviewed.
The foreign exchange dimension adds further complexity. Although the Rupee has remained relatively stable, maintaining that stability requires careful management of dollar demand. Large-scale fuel imports represent one of the country’s biggest foreign currency requirements, making CPC’s purchasing strategy a matter of national economic significance.
The controversy therefore extends beyond fuel pricing alone. It raises a fundamental question about whether better treasury planning and forex management could reduce financial pressures throughout the energy supply chain.
As Parliament intensifies scrutiny and consumers continue to seek answers, the fuel pricing debate has evolved into a broader examination of transparency, market management and economic governance in Sri Lanka’s energy sector.