President Dissanayake counts the fuel cost, two rupees at a time

Fact Check

Amid recent fuel price increases, President Anura Kumara Dissanayake stated in Parliament that a USD 1 rise in the global price of oil per barrel translates into an LKR 2 increase locally.

To verify this claim, FactCheck.lk consulted the fuel pricing formula introduced by the Ministry of Finance (MoF), which is evaluated monthly by the Fuel Price Tracker published by Verité Research.

As shown in Exhibit 1, a hypothetical increase in the barrel price from USD 90 to USD 91 raises the formula-based local price by LKR 2.43, at an exchange rate of LKR 313.16.

However, LKR 0.42 of this increase comes from the tax payable under the price formula. This is because VAT and the Social Security Contribution Levy are applied as a percentage of the cost and increase with rising fuel costs. Therefore, this portion of the price does not reflect an increase in the underlying fuel cost.

As a result, while the formula price calculation increases by LKR 2.43 for every USD 1 increase in the barrel price, the actual underlying price/cost of the fuel supply increases by only LKR 2.01. This aligns with the figure cited by the president.

Therefore, we classify the president’s statement as TRUE.

*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, FactCheck.lk will revisit the assessment if new information becomes available.

Exhibit 1: Change in local fuel prices for a USD 1 increase in the global price of oil