(EnergyAsia, May 29, Thursday) — The Sri Lankan government has confirmed it will not let retail fuel prices rise to reflect the increasing cost of crude oil on the world markets.

Oil companies led by state-owned downstream player Ceylon Petroleum Corporation (CPC) will be forced to write off large losses. So far this year, CPC has run up losses of seven billion rupees. (US$1=107 rupees).

Sri Lanka’s diesel prices are set at Rp80 per litre but would need to be at least around Rp120/litre to reflect prices on international markets. Domestic kerosene sells for Rp70 per litre, compared with its true costs of at least Rp110.

But the government insists that the price caps must remain in place to protect vulnerable consumers and contain a 25% rate of inflation.