Colombo/ Manila: Sri Lanka raised fuel prices by 25 per cent on Sunday, the second increase in two weeks, as the country prepared for more impact from the war in the Middle East.
Regular petrol was increased to 398 rupees ($1.30) per litre, up from 317 rupees, while diesel, the fuel commonly used for public transport, rose by 79 rupees to 382.
Last week, the government ordered an eight per cent increase in retail fuel prices and introduced rationing to limit consumption.
"We hope to achieve a 15 to 20 per cent reduction in fuel consumption with the latest increase," an official at the Ceylon Petroleum Corporation said.
He said President Anura Kumara Dissanayake told them last week that the country must prepare for a prolonged conflict in the Middle East that could affect the island's energy supplies.
The president ordered a four-day working week from last Wednesday and asked employers to reintroduce work-from-home arrangements where possible.
The Strait of Hormuz, a key waterway through which some 20 per cent of global oil exports pass in peacetime, has been effectively closed by Iran in retaliation over the US and Israeli war against it, now entering its fourth week.
Sri Lanka imports all of its oil and also buys coal for electricity generation.
Sri Lanka buys refined petroleum products from Singapore, Malaysia and South Korea, while crude oil for its Iran-built refinery is sourced from the Middle East.
The government has warned that the fighting in the Middle East, and a prolonged war, could seriously undermine its efforts to emerge from the economic meltdown of 2022.
Sri Lanka defaulted on its $46 billion foreign debt in 2022 after the country ran out of foreign exchange. Since then, Colombo has secured a $2.9 billion IMF bailout.
The Philippines has allowed the temporary and limited use of a cheaper but dirtier type of fuel to ensure supply as it finds ways to cope with the impact of the Middle East crisis.
The Department of Energy (DOE) said only vehicles from model year 2015 and earlier, traditional jeepneys, power plants and generators, and the marine and shipping sectors would be allowed to use Euro-II compliant petroleum products.
"The measure is intended to help maintain a continuous, adequate and accessible fuel supply, while allowing limited flexibility for sectors that may be affected," the DOE said in a statement.
It ordered oil companies that will be offering Euro II fuels to maintain segregation from Euro IV across storage, transport and retail systems.
Manila switched to cleaner Euro-IV compliant fuels from Euro-II in 2016. Euro-IV fuels, which remain in force, have sulphur content of 50 parts per million (ppm) versus 500 ppm for Euro-II fuels. Last week, thousands of jeepney drivers took to the streets across the country to protest a more than doubling of local diesel prices after global oil prices surged because of the US-Israel war on Iran. Like many of its Southeast Asian neighbours, the Philippines has taken steps such as shortening the work week and providing fuel subsidies to counter the impact of rising costs. Congress has also granted the president emergency powers to suspend or reduce fuel taxes.
Philippine President Ferdinand Marcos said in a video message on Sunday that the government is talking to India, China, Japan, South Korea, Thailand and Brunei about possible fuel supply arrangements. The country, which relies heavily on Middle Eastern oil for fuel needs, is set to import Russian oil this month for the first time in five years. — Agencies
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