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Sri Lankan transport service providers struggle after sharp fuel price hikes

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ECONOMYNEXT – Sri Lankan transport providers are grappling with practical issues and ethical dilemmas as diesel prices shot up by 45 percent in the second week of March. With schools and offices starting work at full capacity from Monday (14), the situation seems bleak for all parties involved.

An office transport service provider whose route begins from Panadura to the World Trade Center (WTC) in Colombo told EconomyNext that drivers are considering price increments proportional to the diesel price hikes.

‘’Diesel prices increased by one third so travel fees will be increased from 1,800 to 2,000 rupees,” he said.

‘’People will definitely stop coming in the van. I am expecting that, but I have no other choice,’’ he added.

Another transport provider who spoke to EconomyNext said: ‘From an ethical standpoint, we can’t raise fees. The majority of firms are not increasing salaries of employees so it is not fair to go for a higher fee structure.’’

Sri Lanka is currently going through one of the worst financial crises in the country’s history, with dwindling foreign exchange reserves severely impacting essential imports. The state-owned Ceylon Petroleum Corporation (CPC) raised petrol (Octane 92) by 77 rupees and (auto) diesel by 55 rupees last Friday (11), after the island nation’s central bank’s flexible exchange rate resulted in near 30 percent depreciation in the currency within three days.

The move came a day after Lanka IOC, the Indian Oil Corporation unit in Sri Lanka, raised petrol and diesel prices by 50 rupees and 75 rupees respectively to minimise its losses from rupee fall and rise in global oil prices.

As the country eases COVID-19 restrictions and more workers are asked to physically report to work, the price increases are leaving some transport service providers unable to make up their mind.

“We are no longer able to work from home. Transportation cost is a big chunk of my salary and with all these price increments, I will have to choose between going bankrupt or walking to work,’’ one office worker said on the condition of anonymity.

Schools also reopened in full capacity on Monday, and school van drivers remain undecided on whether or not to increase prices according to the fuel hikes.

“The All Island School Van Operators Association (AISVOA) has advised us to implement a 40 per cent increment. But looking at the ethical side, we simply cannot ask the parents to pay that much because it is a massive increase,” says a school van driver whose route takes him from Maththegoda to Colombo.

“I am running on old fuel. The price is high – even if we can pay, there’s no guarantee we’ll be able to run the next day. Many people have had to stop the service,” he added.

Many transport providers said that the current fee increments only take into account the price hikes of diesel, and not the increasing prices of spare parts, tyres and other accessories.

“If we think about everything we need at this time, the price increase will be unmanageable for people,” one transport provider said.

The minimum bus fares for private buses were also increased by 15 per cent on Monday.

A member of the Ceylon Private Bus Owners’ Association told EconomyNext: “Normally I drive from Maharagama to Colombo, but yesterday I only did one round. That too was during peak hours. I think many people will implement that system as it is more convenient to everyone and helps preserve diesel in the long run.”

Meanwhile, Gemunu Wijeratne, Ceylon Private Bus Owners’ Association President, said: ‘’Due to the fuel shortage the buses in operation were limited to 15 to 25 per cent.” (Colombo/Mar15/2022)

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