News & market updates

Ceylon Petroleum Corporation's net profit fell 17.9% to Rs. 17.0 billion in 1H2025 as turnover dropped 19.3% to Rs. 439.5 billion, driven by lower global oil prices and a stronger rupee. CPC also cut dues to Iran to $130.96m by end-June via ongoing tea-for-oil settlements.

President Anura Kumara Dissanayake will present the 2026 Budget (second reading of the Appropriation Bill) to Parliament tomorrow (7 Nov). Debates on the second reading run from 8 Nov with votes and committee stages scheduled through 5 Dec, including the second-reading vote on 14 Nov and the third-reading vote on 5 Dec.

Ceylon Petroleum Corporation reduced its debt to the National Iranian Oil Company to US$130.6m by June 2025 from US$191m a year earlier via a Tea-for-Oil barter agreement. The Finance Ministry report said the settlements and supplier borrowing reflect forex shortages and liquidity measures that have suppressed interest rates.

Fifty-two SOEs posted aggregate profit of Rs. 227.8 billion in 1H 2025, down from Rs. 280.7 billion a year earlier. The drop was driven by a Rs. 13.2 billion net loss at the Ceylon Electricity Board after tariff cuts, despite stronger profits at state banks and Cabinet-approved SOE reforms.

Sri Lanka's forex inflows were US$2,337m in September (down from US$2,521m in August) while imports rose to US$2,048m, leaving a US$289m surplus. Vehicle and fuel import increases drove the shift and analysts warn fiscal-buffer use or liquidity injections could erode reserves and pressure the rupee and rates.

Energy Minister Kumara Jayakody warned that lobbying for higher feed-in tariffs would raise consumer bills, noting solar prices paid to new producers have fallen from 37 → 27 → 24 → 18 rupees. He cited 30% cheaper panels, a stronger rupee, competitive low bids (e.g. Vidullanka ~3.77 USc/kWh) and additional grid/BESS costs.

Sri Lankans spent US$286m on vehicles in September, taking nine-month vehicle imports to US$1.204bn, the central bank said. The central bank bought US$177.3m from forex markets in September, with rupee depreciation linked to dollar purchases, excess liquidity and buy-sell swaps.

Ceylon Petroleum Corporation revised retail fuel prices effective last midnight: Octane 92 petrol reduced by Rs.5 per litre and Super Diesel increased by Rs.5 per litre; prices of other fuels unchanged.

IMF cut Sri Lanka's 2026 growth forecast to 3.1% from 3.5%, saying the economy is returning to trend after an exceptional post-crisis rebound. The IMF also reported staff-level agreement on the Fifth Review of the EFF and noted progress on electricity pricing reforms.

BOI Chairman Arjuna Herath said high construction and energy costs are discouraging hotel investors in Sri Lanka by reducing yields. The government is reviewing tax structures, seeking to lower energy costs and promoting renewable generation through competitive CEB tenders.

Sri Lanka's rupee opened at 304.45/55 to the US dollar while government bond yields were broadly flat after declines; the rupee has fallen from about 302.55/60 since the start of the month. The central bank has stopped printing money via open market operations and is providing liquidity only for clearing at the ceiling rate.

The Cabinet approved awarding a seven-month diesel supply contract (five shipments of 1,400,000 barrels ±5% each) starting 15 Nov 2025 to 14 Jun 2026 to a Singapore trading firm after competitive bids.

Sri Lanka's Cabinet awarded Singapore's Trafigura a contract to supply 1.4 million barrels of diesel in five shipments over seven months from Nov 15 to the state-run Ceylon Petroleum Corporation. The long-term award followed the High-Level Standing Procurement Committee's recommendation amid seven bidders.

Sri Lanka ran a marginal current-account surplus of 6 billion rupees in Jan–Sept 2025 as tax and non-tax revenues rose while recurrent spending grew; the overall deficit was 441 billion rupees after grants. The central bank missed its 5–7% inflation target and the rupee has begun to depreciate amid policy framework concerns.

Tokyo Cement Group reported Q2 turnover of Rs. 16,322 million and PAT of Rs. 1,003 million for the quarter ended 30 Sept, versus turnover of Rs. 13,833 million and PAT of Rs. 1,082 million a year earlier. Volumes were stable but margins contracted due to capitalisation of the Trincomalee expansion as the company cited a construction-led recovery supported by lower rainfall, low interest rates, stronger remittances and ongoing infrastructure projects.

Sri Lanka worker departures for foreign jobs fell 5% to 143,037 by June 2025, with monthly outflows easing from February before a May uptick. The central bank links the easing to recovery in activity and wages and the piece notes ties to remittances, policy and rupee moves.

Tokyo Cement Group reported Q2 (30 Sep 2025) turnover of Rs.16,322 million and PAT of Rs.1,003 million versus Rs.13,833 million turnover and Rs.1,082 million PAT a year earlier; margins contracted due to capitalisation of the Trincomalee expansion projects.

Cabinet approved amendments to the Strategic Development Projects Act to allow project-specific tax incentives to attract FDI, aimed at reviving major projects including the $3.7bn Hambantota oil refinery and the Port City; the Attorney General cleared the draft for gazetting and parliamentary tabling.

Sri Lanka's Cabinet approved amendments to the Strategic Development Act to provide tax incentives for large projects, aiming to fast-track a $3.7bn Hambantota refinery and Port City investments that stalled over tax concessions. The IMF has warned such incentives have previously reduced government revenue.

HIP’s RORO and container yard cargo volumes jumped 151% y/y to 6,028,493 metric tons by September 2025 (vs 2,397,971 LY). Despite congestion after lifting the vehicle import ban, operations optimized yard allocation, added stevedores and yard space, and invested (including $41m in cranes) to maintain vessel handling.

The International Chamber of Shipping said it was disappointed after IMO member states failed to agree the proposed Net‑Zero Framework — a global shipping carbon‑pricing mechanism — at the MEPC extraordinary session in London, leaving industry uncertainty for decarbonisation investments.

Foreign Minister Vijitha Herath met Sinopec VP Liu Liangong to resolve remaining issues delaying Sinopec's proposed $3.7 billion Hambantota oil refinery; talks were positive but no final decision has been announced. The refinery would process 200,000 barrels per day and the Sinopec team will meet Energy Ministry and BOI officials.

IMF officials said Sri Lanka has made strong recovery gains (5% growth last year; an estimated 4.2% this year and next) but urged continued fiscal discipline and reform of state-owned enterprises, including electricity pricing reforms, to sustain stabilization and growth.

IMF urged Sri Lanka to maintain fiscal discipline and press ahead with SOE reforms as crucial to sustain recovery, noting GDP growth of 5% last year and an estimated 4.2% this year and next. It highlighted electricity pricing/cost-recovery reforms and said energy prices and weather will affect any price adjustments.

Evolution Auto delivered the first fleet of KYC electric vans in Sri Lanka, handing over eight KYC V7 vans to local businesses. The vans provide zero tailpipe emissions and up to Rs. 100,000 in running-cost savings, targeting logistics, delivery, retail and service firms.

Sri Lanka's Foreign Minister Vijitha Herath met Sinopec VP Liu Liangong to resolve outstanding issues for Sinopec's planned $3.7bn, 200,000 barrels-per-day refinery in Hambantota; a Sinopec team will meet the energy ministry and BOI to finalise remaining matters.

The IMF program keeps the central bank's ceiling on domestic assets (net credit to government) flat. Analysts warn that, with high excess liquidity, this could limit the bank's ability to retain bought foreign reserves and raise risks of renewed monetary debasement, inflation and rupee pressure.

PUCSL confirmed electricity tariffs will remain unchanged for the final quarter of 2025, rejecting the CEB's proposed 6.8% hike. The regulator directed CEB and LECO to use prior surpluses (Rs. 8.5bn of a Rs. 22.9bn Q1‑2025 profit; Rs. 16.9bn earmarked for Q1‑2026) and to account for a Rs. 60.5bn 2024 revenue surplus.

The Public Utilities Commission of Sri Lanka (PUCSL) decided not to raise electricity tariffs and said current rates will stay in place for the next three months; the CEB had sought a 6.8% increase.

LAUGFS Gas PLC suspended operations of its Dubai subsidiary Slogal Energy DMCC after the US Treasury/OFAC designated the subsidiary for allegedly trading Iranian-origin LPG; LAUGFS says domestic LPG distribution is unaffected and will seek delisting while conducting a legal and compliance review.