Private fuel suppliers cut diesel releases; Government weighs legal action

Private fuel companies in Sri Lanka have cut back the diesel they release to filling stations, and the Government has said it may seek legal advice to act against them. For transporters and anyone moving containers by road, the issue is supply at the pump, not just price.

The Daily FT reported on 8 October 2026 that Energy Minister Anura Karunathilaka told Parliament the Government will seek legal advice on action under the Petroleum Act if private suppliers keep restricting fuel distribution to filling stations. "If this situation continues, we will seek legal advice and take action," he said, according to the Daily FT. Talks with the fuel operators were scheduled at the Presidential Secretariat.

The minister said the problem began when the Government decided not to raise local fuel prices in line with world prices. Private suppliers had asked for prices to rise to world market levels. Instead, the Government gave a Rs. 70 a litre diesel subsidy for three months. The minister said the companies are still making losses and have limited supply.

EconomyNext reported on 6 October that fuel queues had reappeared in Colombo. It quoted the minister as telling Parliament that, compared with February:

• Lanka IOC had cut market releases of auto diesel by 45%, Euro super diesel by 88% and Octane 92 petrol by 3%.
• Sinopec had cut diesel by 66% and Octane 92 by 30%.

In a separate EconomyNext report the same day, Ceylon Petroleum Corporation (CPC) Chairman D J A S De S Rajakaruna said, comparing with the start of the year, that Lanka IOC had cut diesel supply by 45%, Sinopec by 66% and RM Parks by 48%. He said CPC had raised its supply by 26%, from 3,074 metric tons to 3,900. He also said that under their agreements private retailers must keep minimum fuel stocks, and "they don't even maintain that minimum stock".

The two outlets give slightly different figures for CPC's market share. EconomyNext quoted the minister as saying CPC's share rose from 54% to 82%. The Daily FT quoted him as putting it at around 77% to 80%, up from 50% to 55% before the price controls.

Container and cargo trucks run on diesel. When private stations run short, drivers may queue or travel further to CPC outlets, which can delay pickups and deliveries at the port and at factories.

The Government's powers are limited, according to the minister. The Daily FT reported that under the four agreements with suppliers, the most recent signed in 2022, the Government can require minimum stocks and a minimum national supply, but it cannot direct a company to supply a particular filling station or area.

The pressure comes from world prices. Trading Economics data showed Brent crude at US$104.43 a barrel on 9 October. CPC has said local prices can be held through October, as we reported in our post on Brent at US$104. EconomyNext reported that analysts expect CPC's larger share of subsidised sales to result in a loss for the corporation.

On 6 October the minister said he expected the problem to ease "to some extent" by Wednesday or Thursday as CPC took on more of the load. We did not find a later official update on the talks with suppliers by 10 October.

• Ask your transport provider whether fuel supply is affecting their trucks this week, and whether they are refuelling at CPC stations.
• Allow extra time for port pickups and deliveries that depend on a single truck run.
• Check whether your transport contract has a fuel clause, in case the subsidy ends or prices change after October.
• Follow official statements from the Ministry of Energy and CPC rather than social media reports on shortages.

For background on fuel prices, see our post on the October diesel price and subsidy.