Fuel Protests: Sri Lanka fuel users protest over steep increase

Lanka Business Online
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A steep fuel price increase in Sri Lanka to correct mounting economic imbalance and pressure on a currency peg has seen protests by bus operators and fishermen, reports said.

Fishermen blocked a road on the main road to the capital Colombo from Negambo, a fishery centre, a media report said.

Sri Lanka raised the price of kerosene by 35 rupees to 106 rupees a litre Saturday, and Diesel from by 31 rupees to 115 rupees, both fuels used by fishermen.

Sri Lanka does not have an automatic price formula to change prices based on cost, but sale prices arbitrarily changed by rulers based on political expediency.

When prices are held down for long periods, Sri Lanka's rupee peg comes under pressure, partly due to heavy borrowings from the banking system by energy utilities to buy dollars, putting pressure on both inflation and the rupee peg.

Sudden price corrections then lead to protests.

Commuters were stranded on roadsides Monday after a key bus operators' union kept buses at home

Sri Lanka's The Island newspaper quoted Lanka Private Bus Owners' Association President Gemunu Wijeratne as saying that they wanted a 17 percent fare hike of diesel at 76 rupees, lower than even the 84 rupee price before the hike

State-run buses, and operators of another union continued to run their vehicles.

The Federation of All Island Private Bus Associations a rival association had said they will continue to operator their busses.

"We have a total strength of 11,000 buses comprising 7500 for short distance travel and another 3,500 buses, on long distance running," the newspaper quoted the union chief Anjana Priyanjith as saying.

Media reports said the Treasury is expected to give a subsidy from tax payer's money to bus operators to prevent them from raising fares.

Tax payers are expected to subsidize diesel up to 80 kilometres a day per long distance bus and 60 kilometres for a short distance bus, The Sunday Times newspaper said.

The Island newspaper quoted minister for private transport C B Ratnayake as saying that Diesel would be issued at 84 rupees a litre for bus operators. Sri Lanka has a large number of ministers, including separate ministers for state and private transport.

© LBO