COLOMBO Feb 23 Sri Lanka raised the price of fuels to record levels on Saturday to prevent the state-owned oil firm suffering further losses due to increased global oil prices and a reduction in Iran crude imports, an official said.
Ceylon Petroleum Corporation (Ceypetco) raised the price of a litre of gasoline by 1.9 percent to 162 rupees ($1.27) and diesel by 5.2 percent to 121 rupees, both to record highs in the local currency.
The price hikes come after a recent International Monetary Fund mission emphasized the need to move towards cost recovery pricing to place Ceypetco on a sustainable footing.
"Last year, we (Ceypetco) made a loss of 89 billion rupees ($698.59 million), so we thought to do away this loss by making an adjustment to prices in a small margin," Petroleum Minister Anura Priyadarshana Yapa told reporters in Colombo.
Yapa, however, said Ceypetco would still subsidise 10 rupees in each litre of diesel and 23.96 rupees a litre of kerosene despite the price increase.
Sri Lanka also faces constraints in importing cheap crude oil from Iran in the face of sanctions on Iran imposed by the United States because of its nuclear programme.
Sri Lanka's only 50,000 barrel-per-day refinery is designed predominantly to refine Iranian light crude, though crudes from Oman and Saudi Arabia can also be refined at a lower refining efficiency.
"(With) Oman blend, our yield is low compared to Iranian light. When our refinery is designed for particular crude and when we can't get that...there is a 20 percent reduction in the yields," he said.
Sri Lanka's only private sector fuel retailer, Lanka IOC PLC , a subsidiary of Indian Oil Corporation Ltd, also increased its gasoline price in line with the state-run firm. It had already raised its diesel price to 121 rupees.
In December, Sri Lanka raised gasoline prices by 6.7 percent. ($1 = 127 rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Nick Macfie)