Sri Lanka’s LPG market is facing increasing pressure as import dependence, infrastructure limitations, and market concentration combine to create recurring supply challenges. For a country where cooking gas cylinders are a daily necessity for millions of households, even short-term shortages can have far-reaching economic and social consequences.

At the centre of the issue lies the structure of the LPG market itself. Sri Lanka’s supply is dominated by two companies: Litro Gas Lanka and LAUGFS Gas. Together they form a duopoly, with Litro controlling roughly 80% of the domestic market and LAUGFS supplying the remaining share.

This limited competition has created operational complications, particularly during supply disruptions. Gas cylinders used by the two companies are not interchangeable, meaning consumers cannot easily switch brands during shortages. As a result, even when LPG is available within the country, distribution imbalances can leave households unable to access gas for cooking.

Government officials have recently acknowledged that some shortages were linked to distribution challenges within the LAUGFS network. Periodic supply interruptions reportedly occur every few months, lasting about a week at a time. Such disruptions, although temporary, highlight the fragility of Sri Lanka’s LPG distribution system.

In response to recent supply concerns, authorities have taken several short-term measures. The Government has negotiated temporary storage access from the Hambantota International Port, where LAUGFS operates a large LPG terminal capable of storing around 30,000 MT. A portion of this capacity approximately 15,000 MT has been made available to support national supply needs during the current situation.

The Government has also introduced emergency regulatory measures allowing greater volumes of LPG to be diverted to the local market. This step was necessary after LAUGFS experienced disruptions related to the collapse of its export market, which had previously absorbed a significant share of its production.

To further stabilise supply, authorities have ordered an additional 100,000 LPG cylinders to address container shortages within the distribution network. While such measures may ease immediate pressures, experts argue they do little to address the structural weaknesses of the industry.

Economists warn that Sri Lanka’s LPG sector has suffered from decades of underinvestment in infrastructure, particularly storage and logistics facilities. With demand steadily increasing due to urbanisation and lifestyle changes, relying on ageing infrastructure designed decades ago is no longer sustainable.

The economic implications of prolonged LPG shortages could be severe. Households unable to obtain cooking gas may turn to electricity, increasing demand on the power grid and raising national energy costs. Since electricity generation itself depends heavily on imported fuel, this shift could place additional strain on the country’s foreign exchange reserves.

Another potential consequence is the emergence of black markets, where gas cylinders are sold at inflated prices during shortages. Such practices disproportionately affect low-income households and contribute to rising living costs.

Experts therefore emphasise the need for stronger government oversight and long-term planning. Expanding storage capacity, diversifying supply sources, and improving market regulation will be essential to ensuring a stable LPG supply.

Without these reforms, Sri Lanka risks facing recurring energy disruptions that directly impact the daily lives of its citizens and the resilience of its economy.

Sri Lanka’s expanding interest in digital currencies is drawing attention from financial watchdogs, as regulators warn that an unregulated virtual asset market could open new pathways for illicit financial activity. Recent findings from the Financial Intelligence Unit and the Central Bank of Sri Lanka highlight growing vulnerabilities linked to cryptocurrency usage in the country.

The concerns emerge from the National Risk Assessment on Money Laundering, Terrorist Financing and Proliferation Financing 2024/25, which identifies the country’s virtual asset ecosystem as still being in its early stages. While digital currencies have yet to achieve mainstream financial integration, interest among Sri Lankan investors is rising rapidly, largely driven by speculation and the search for alternative investment avenues.

Despite this growing interest, Sri Lanka still lacks a dedicated legal and regulatory framework governing virtual assets or the companies that facilitate their use. Without licensing requirements, supervisory mechanisms or enforceable anti-money laundering obligations, the sector remains largely outside formal oversight.

Investigators say this absence of regulation creates a significant vulnerability. Virtual asset service providers operating internationally can still serve Sri Lankan users without registering locally, making it difficult for authorities to track suspicious transactions.

The risk assessment classifies different forms of digital asset activity based on their exposure to financial crime. Peer-to-peer trading platforms and non-custodial digital wallets are considered medium-risk channels for money laundering and terrorist financing. These tools allow users to transact directly with each other without relying on a central intermediary, limiting the ability of authorities to monitor transactions.

By contrast, custodial wallets and conversions between traditional currencies and digital assets are viewed as comparatively lower-risk, largely because they tend to involve platforms that maintain user records and basic compliance procedures.

However, financial analysts warn that the real concern lies in how digital assets can be used to bypass national financial regulations. Cryptocurrencies are not recognised as legal tender in Sri Lanka, and authorities have repeatedly cautioned the public about investing in them. Yet many investors continue to purchase digital assets through global cryptocurrency exchanges.

In some cases, investors reportedly convert Sri Lankan rupees into stablecoins using peer-to-peer networks before transferring funds abroad. Experts say this practice may allow individuals to sidestep the country’s foreign exchange controls, potentially enabling unregulated capital flows.

The structure of blockchain technology itself also presents challenges for enforcement. Although transactions are recorded on a public ledger, the identities of the parties involved are often concealed behind digital addresses. Without mandatory reporting from virtual asset platforms, authorities may struggle to detect tax evasion or hidden wealth accumulation linked to digital transactions.

Nevertheless, enforcement agencies have begun to adapt. Sri Lankan investigators are increasingly pursuing cases involving virtual assets and, in some instances, have successfully frozen cryptocurrency holdings stored on foreign platforms through international cooperation.

The latest national risk assessment recommends identifying a dedicated regulator for the sector and introducing compliance obligations for virtual asset service providers. Policymakers believe such measures could reduce the risks of money laundering while enabling the country to responsibly explore the economic potential of blockchain technology.

The escalating Middle East conflict has created a geopolitical crisis with profound economic implications far beyond the region.

As tensions disrupt shipping through the Strait of Hormuz a route responsible for roughly one-fifth of global oil flows  energy markets have surged into turmoil. Brent crude prices have jumped above $110 per barrel, sending shockwaves through import-dependent economies.

Few countries feel that impact as sharply as Sri Lanka.

For the island nation still rebuilding after its sovereign debt default, the oil spike threatens to destabilize several pillars of economic recovery from foreign reserves and currency stability to exports, business investment, and debt sustainability.

Reserves under Pressure

Sri Lanka rebuilt its foreign exchange reserves to about $7.28 billion by early 2026, a critical buffer after the 2022 financial crisis.

However, higher oil prices could rapidly drain those reserves. Economists estimate the annual fuel import bill could swell to $4.5–5 billion if crude prices approach $120 a barrel.

Such a surge would place heavy pressure on the balance of payments and could quickly erode the reserve cushion the country painstakingly rebuilt.

Currency Stability at Risk

The Sri Lankan rupee has remained relatively stable in recent months, hovering around 310–315 per dollar.

But energy shocks often trigger currency volatility in import-dependent economies. As fuel importers rush to secure foreign exchange, demand for dollars rises sharply, pushing the rupee downward.

Even a 5 percent depreciation would make imports significantly more expensive and complicate Sri Lanka’s fiscal management, especially because much of the country’s debt is denominated in foreign currency.

Debt Sustainability Concerns

Sri Lanka is currently restructuring debt and preparing to resume full external repayments by 2028, when annual servicing is expected to exceed $3.2 billion.

Those repayment projections assume moderate growth and stable energy prices.

A prolonged oil shock could undermine both assumptions. Slower growth combined with a weaker currency would raise the real burden of external debt and could force policymakers to reconsider debt sustainability projections.

Export Competitiveness Threatened

Energy costs are also critical for Sri Lanka’s export industries.

Sectors such as apparel manufacturing, tea processing, and rubber production rely heavily on electricity and fuel. Rising energy costs inflate production expenses and reduce price competitiveness in global markets.

At the same time, geopolitical tensions have pushed shipping insurance premiums and freight costs higher, making exports more expensive to deliver.

For an economy targeting $20 billion in export earnings, the loss of competitiveness could significantly reduce foreign currency inflows.

Business Confidence Weakens

The private sector thrives on predictability, and energy volatility undermines investment confidence.

Recent trading sessions on the Colombo Stock Exchange have reflected investor anxiety, with the All Share Price Index dropping sharply following news of the Middle East escalation.

Higher electricity tariffs, rising transport costs, and exchange rate uncertainty make long-term planning difficult for businesses. Foreign investors, already cautious after Sri Lanka’s default, may delay projects until economic conditions stabilize.

Social and Political Pressure

The economic effects eventually reach households.

Fuel price increases trigger a chain reaction across the economy raising bus fares, food prices, and electricity costs. Small businesses face shrinking margins while middle-income households experience declining purchasing power.

For the poorest segments of society, higher energy prices can directly affect food security and access to basic services.

A Recovery Dependent on Global Stability

Sri Lanka’s economic rebound over the past two years has been widely viewed as a fragile success story.

But the Hormuz crisis underscores how dependent that recovery remains on global stability.

If oil prices retreat quickly, the country may absorb the shock. If the disruption drags on, however, Sri Lanka could face renewed pressures on its currency, fiscal program, and economic growth.

In that scenario, the island’s path out of crisis could become far longer and more uncertain than policymakers had hoped.

A growing controversy over Sri Lanka’s coal procurement process has intensified after Transparency International Sri Lanka (TISL) formally sought key documents from multiple government agencies to clarify allegations surrounding the tender issued for supplying coal to the Norochcholai Lakvijaya Coal Power Plant.

The request signals a new phase in the debate over the procurement, which has become politically sensitive amid corruption allegations linked to the current leadership of the Ministry of Energy.

Using Sri Lanka’s Right to Information framework, TISL has asked for records from the Lanka Coal Company (LCC), the National Procurement Commission, and the Ministry of Ports, Shipping and Aviation. The information sought covers tender documentation, supplier evaluation processes, coal quality verification reports, shipment records, and financial transactions linked to the contract.

The procurement process began attracting scrutiny in early 2025 when the Energy Ministry stepped in to conduct the tender on behalf of the LCC. Critics say amendments were made to the bidding documents before the tender was issued, raising questions about whether the changes may have benefited specific suppliers.

Further concerns emerged when the tender submission period was reportedly shortened, limiting the time available for potential bidders. Civil society groups and opposition figures have argued that such changes could reduce competition and weaken transparency in public procurement.

By September 2025 the tender had been awarded, but controversy did not subside. Instead, attention shifted to the supplier selected and the coal consignments delivered under the contract.

Reports surfaced that several shipments had already arrived in Sri Lanka, sparking allegations that some of the coal supplied might not meet the required quality specifications. Questions about coal quality escalated in January 2026 when claims of inferior shipments triggered debate about possible financial losses and operational risks for the country’s power generation system.

The Ceylon Electricity Board (CEB) later confirmed that an internal investigation had been initiated. However, officials indicated that the probe was focused largely on procedural issues related to document disclosures rather than the procurement process itself  a distinction that has drawn criticism from transparency advocates.

Parliament has also stepped into the controversy. The Parliamentary Sectoral Oversight Committee on Infrastructure and Strategic Development recently summoned the Lanka Coal Company to provide explanations about the shipments and quality assessments. Meanwhile, the Committee on Public Enterprises (COPE) has signalled plans to conduct a broader inquiry into the procurement.

Against this backdrop, TISL says the public has a right to understand whether the procurement adhered to established rules and whether safeguards designed to protect public funds were properly applied.

The organisation is seeking certified records covering tender transparency, supplier evaluation criteria, coal quality verification procedures, financial penalties for substandard deliveries, and the oversight mechanisms that governed the contract.

According to TISL, weaknesses in procurement oversight can undermine both the responsible use of public funds and the reliability of essential services such as electricity supply.

With Sri Lanka still recovering from an economic crisis that exposed systemic governance failures, the outcome of this investigation could become a significant test of whether reforms to the country’s procurement system are being implemented effectively.

Foreign Affairs, Foreign Employment and Tourism Minister Vijitha Herath says Sri Lanka is positioning itself as an international trade hub for investors following major reforms introduced by the current government.

Speaking during an interview with Observer Research Foundation (ORF) Chairman Sunjoy Joshi on the sidelines of the Raisina Dialogue 2026 in New Delhi, the Minister said a free and fair investment environment has been created for both local and foreign investors.

The interview was conducted under the theme “Sri Lanka Eyes Global Investments Following Economic Crisis.”

Minister Herath said the government’s zero tolerance policy on corruption, along with new economic reforms, has significantly improved investor confidence in the country.

He noted that the government has introduced a simple and transparent tax system, a single-window mechanism for investors and a new investment protection bill aimed at strengthening the investment climate.

“The Government is introducing a new investment protection bill, which has already been submitted to the relevant authorities. We have also introduced a single-window system and a transparent tariff structure to make it easier for investors to operate in Sri Lanka,” he said.

According to the Minister, improved governance and the elimination of bribery and corruption have also helped the government record higher revenue from the Customs, Excise and Inland Revenue Departments.

Herath also highlighted Sri Lanka’s strategic geographic location, noting that the country lies close to major East–West international shipping routes, making it attractive for global trade and logistics.

He said Sri Lanka’s key ports — Colombo, Hambantota and the natural harbour in Trincomalee — offer strong potential to develop the country as a major logistics and maritime hub.

The Minister also noted that regional cooperation will be important in addressing emerging global security and economic challenges.

He said Sri Lanka is working closely with regional organizations such as the Indian Ocean Rim Association (IORA) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) to strengthen economic and security collaboration.

According to Herath, leveraging regional partnerships and Sri Lanka’s strategic location will help attract international investors and logistics operators while supporting the country’s long-term economic recovery.

Global oil prices plunged more than 13 percent on Tuesday after surging to their highest levels since 2022 in the previous trading session, following comments by U.S. President Donald Trump suggesting that the war with Iran could end soon.

Brent crude futures fell by $12.46, or 12.6 percent, to $86.50 a barrel by 12:58 p.m. EDT (16:58 GMT). U.S. West Texas Intermediate (WTI) crude also dropped $12.24, or 12.9 percent, to $82.53 per barrel.

The sharp decline came after oil prices had spiked the previous day, with both global benchmarks rising above $119 a barrel amid fears that the escalating conflict involving Iran could disrupt global energy supplies.

Concerns over potential supply shortages had intensified after Saudi Arabia and other major producers implemented output cuts, increasing worries about tighter global supply.

Market sentiment shifted after President Trump indicated that the conflict with Iran could end soon, easing immediate fears of a prolonged disruption to oil supplies in the Middle East.

However, analysts say oil markets remain highly volatile as ongoing developments in the conflict continue to influence global energy prices.

Prime Minister Dr. Harini Amarasuriya held discussions with Asian Development Bank (ADB) President Masato Kanda during her official visit to Manila, the Philippines.

During the bilateral meeting, both sides reaffirmed the strong partnership between Sri Lanka and the Asian Development Bank, according to the Office of the Prime Minister.

ADB President Kanda commended Sri Lanka’s efforts to stabilise its economy and advance recovery following the recent economic crisis.

The Prime Minister expressed Sri Lanka’s appreciation for the ADB’s continued development cooperation and highlighted the importance of ADB-supported initiatives across key sectors that contribute to the country’s recovery and long-term development.

Meanwhile, Prime Minister Amarasuriya also held discussions with Yingming Yang, Vice President for South, Central and West Asia at the ADB, during her visit to Manila.

During the meeting, the Prime Minister and ADB officials reviewed the progress of ongoing ADB-funded projects in Sri Lanka and explored opportunities to further strengthen collaboration in areas such as health, education and social development, the Prime Minister’s Office said.

Qatar Airways has announced that it will operate 29 flights on Thursday, including 15 departures from Doha and 14 inbound flights.

Although Qatar’s airspace remains closed, the airline has gradually increased the number of special flights it operates between Doha and major cities around the world since last weekend.

On Thursday, March 12, Qatar Airways will operate flights from Doha to the following destinations:

Colombo, Cairo, Casablanca, Johannesburg, Sao Paulo, New York, Frankfurt, Madrid, London, Beijing, Mumbai, New Delhi, Islamabad, Jakarta and Manila.

The airline will also operate flights to Doha from several cities, including Cairo, Dallas/Fort Worth, London Heathrow, Paris, Madrid, Rome, New Delhi, Jeddah, Muscat, Hong Kong, Seoul, Bangkok, Kuala Lumpur and Melbourne.

The special flight schedule comes as airlines continue to adjust operations amid regional airspace restrictions linked to the ongoing Middle East conflict.

Power outages were reported in several parts of the country yesterday (11), causing inconvenience to residents and businesses.

According to reports, electricity breakdowns occurred in areas including Gampaha, Kalutara, Ratnapura, Beruwala, Puttalam and Anuradhapura.

The disruptions are linked to trade union action by electricity sector workers over a number of demands. As a result of the industrial action, more than 12,000 electricity breakdowns have been recorded across the island.

Authorities said technical teams are currently working to restore power in the affected areas, while the situation continues to impact thousands of households nationwide.