News & market updates

United Petroleum Lanka has initiated formal dispute-resolution proceedings against the Government of Sri Lanka after terminating an April 2025 exit agreement, alleging the government failed to fulfil a key Ministry of Energy commitment that delayed its withdrawal. The Australian-owned subsidiary suspended operations in December 2024 and says it met its contractual obligations.

United Petroleum Lanka has terminated its April 2025 exit agreement with the Sri Lankan government and initiated formal dispute resolution after the government failed to fulfil a key obligation. The Australian-owned fuel retailer suspended supply operations in December 2024, saying government deviations made its investment economically unsustainable.

Laugfs Gas (LGL.N0000) halted operations of its Dubai unit SLOGAL Energy DMCC and launched a legal and compliance review to seek delisting after the US Treasury designated the unit for alleged trading in Iranian petrochemicals. The company said its Sri Lanka LP gas distribution is not affected.

Hayleys Fentons (Hayleys Group) launched Hayleys Mobility to distribute OMODA, JAECOO and SRM new-energy vehicles in Sri Lanka and expand EV charging infrastructure via a partnership with StarCharge.

Government deposited Rs1.1 trillion in state banks by end-2Q2025, with 80.7% in term deposits maturing within one year, the central bank said. The short-term maturity profile raises liquidity risk and could put pressure on forex reserves and interest rates if large withdrawals occur.

Private credit in Sri Lanka hit a record Rs226.8 billion in August 2025, up from Rs201.5 billion in July and taking the year-to-date total to Rs1,128 billion. Year-to-date private-sector credit rose 20.5% y/y to Rs9,284 billion while net credit to government from commercial banks fell in August.

US Treasury OFAC designated Slogal Energy DMCC, a Dubai unit of Sri Lanka’s Laugfs group, for facilitating sales and shipments of Iranian LPG to Sri Lanka and Bangladesh (including a 17,000 mt delivery), blocking their U.S. property and prohibiting transactions.

IMF urged Sri Lanka to press ahead with unbundling the Ceylon Electricity Board and to maintain cost-reflective electricity pricing as a structural benchmark under the EFF, and said it is assessing the CEB's tariff submission to the PUCSL.

IMF staff and Sri Lankan authorities reached a staff-level agreement on the Fifth Review of the Extended Fund Facility, which if approved would give Sri Lanka access to SDR 254 million (about US$347m), raising total disbursed to SDR 1,524 million (~US$2.04bn). Approval is contingent on parliamentary passage of the 2026 Appropriation Bill and completion of a financing-assurances review; the IMF also noted 4.8% y/y growth in 2025H1, Sep inflation of 1.5% y/y and reserves of US$6.1bn while urging f

The Cabinet approved awarding Singapore-based BB Energy Asia a contract to supply four shipments of Murban crude to Sri Lanka, with deliveries from 1 January to 30 April 2026 following CPC's competitive tender. Payment options include immediate release from stocked tanks or payment within 30 days via a Bank of Ceylon letter of credit.

IMF staff reached a staff-level agreement on the fifth review of Sri Lanka’s EFF, which upon Executive Board approval would unlock about US$347 million in financing. The IMF noted progress on inflation, reserves, growth, revenue, and urged continued fiscal, energy pricing, SOE and banking reforms.

Sri Lanka's renewable power share fell to 66% in July from 73% in June as total generation rose to 1,583 GWh and fuel oil use jumped to 103 GWh. The Ceylon Electricity Board has sought a tariff increase for the rest of 2025 and is tendering for batteries, offering a 45.80 tariff for battery-stored night-peak supply.

Sri Lanka's Cabinet approved awarding a contract to BB Energy Asia to supply four shipments of Murban crude to the Ceylon Petroleum Corporation, for delivery between Jan 1 and Apr 30, 2026.

The Public Utilities Commission of Sri Lanka will hold a public consultation today at BMICH (9:00am, registration 8:30am) to review the proposed 2025 electricity tariff structure and gather consumer and stakeholder feedback.

Sri Lanka's construction industry urged the government to immediately implement long-delayed relief measures, warning a 23% contraction in 2023 and over 500,000 job losses since 2019. Industry demands include a standing steering committee, tax/cash-flow relief, contract protections, and forex/inflation compensation.

DIMO’s fully owned subsidiary DIMO Moveflex launched ZHONGTONG’s new premium bus range in Sri Lanka and handed over 17 buses to customers. The models target tourism, intercity and institutional transport with claimed 10–15% fuel-efficiency gains and island-wide after-sales support.

World Bank Country Manager Gevorg Sargsyan urged urgent reforms in Sri Lanka’s energy pricing, management and investment, public-sector “right-sizing” and efficient PPPs to lower high energy costs and boost competitiveness. The delegation also called for strengthening ports and logistics to unlock trade and investment.

A World Bank team met Sri Lanka's parliamentary finance and public enterprise committees on 25.09.2025, urging urgent energy-sector reforms and highlighting ports/logistics and public-sector rightsizing as priorities. Discussions also covered revenue collection, job creation, tourism, agriculture and the use of PPPs.

Fitch affirmed Sri Lanka's long-term foreign-currency IDR at 'CCC+' and forecasts FX reserves of $6.4bn by end-2025. It projects GDP growth of 4.4% in 2025, primary surpluses averaging 2.7% of GDP in 2025–27 and general government debt around 96% of GDP in 2027.

Ceylon Petroleum Corporation announced selective fuel price cuts effective midnight: Auto Diesel down Rs.6 to Rs.277/litre, Petrol 95 Octane down Rs.6 to Rs.335/litre and Kerosene down Rs.5 to Rs.180/litre; Petrol 92 Octane and Super Diesel unchanged.

US State Department's 2025 Investment Climate Statement says stalled SOE privatisations—notably the Ceylon Electricity Board—rigid labour rules and limits on foreign participation are weighing on Sri Lanka’s investment outlook. It warns high costs and opaque procurement threaten the government's $5bn FDI target for 2025.

Secondary bond market activity was subdued with Rs.1.64 billion transacted and yields broadly steady (01.06.26: 8.25%; 15.01.28: 9.00%; 01.07.30: 9.70%). Bloomberg Economics projects September CCPI at +2.5% YoY; USD/LKR eased to 302.55/302.60 and net liquidity surplus stood at Rs.170.90 billion.

The IMF cautions that Sri Lanka's debt restructuring — which delivered an estimated 41% NPV reduction — leaves recovery fragile and that durable stability requires fiscal discipline and stronger institutions. The paper sets targets including cutting public debt below 95% of GDP by 2032 and capping external debt service.

CoPE reported that the Ceylon Electricity Board incurred a Rs. 594.36 billion loss between 2014 and 2022, citing mismanagement and rule violations. The committee linked those losses to steep tariff hikes in August 2022, flagged irregular shareholdings and misuse of funds (unauthorised PF loans of Rs. 6.6bn, Rs. 507m in unapproved allowances) and called for accountability and reforms.

SriLankan Airlines unveiled a five-year strategic plan to pursue financial stability via debt restructuring, fleet expansion, operational efficiency and sustainability. In the first five months of 2025/26 it reported a 10% rise in passenger revenue, 22% more passengers and a 10% capacity increase; on-time performance improved to 74%.

Sri Lanka has no immediate plans to import LNG from India because required storage infrastructure has not been built; the energy minister said construction would take at least three years and imports would begin only after completion.

IMF staff and MPs held a Sept 12, 2025 discussion urging electricity tariff reform to ensure cost recovery and cost-reflective pricing while protecting consumers and enabling investment to meet a 70% renewables target by 2030. They warned thermal generation cost volatility, called for stronger governance, targeted subsidies, and predictable tariffs.

An IMF technical team and Sri Lankan MPs reviewed the Ceylon Electricity Board tariff methodology ahead of a November 2025 IMF deadline, urging tariffs that ensure cost recovery and cost-reflectiveness, protect affordability and support a 70% renewables target by 2030 while warning that weak governance and volatile thermal fuel costs would deter investment.

President Anura Kumara Disanayake inaugurated construction of six oil storage tanks at the Kolonnawa Petroleum Storage Complex, a Rs. 3.7 billion project (three 15,000 m3, two 7,000 m3, one 5,000 m3) awarded to an Indo East–Ceylex JV, due by September 2027. He also highlighted electricity cost reductions, a 100 MW Siyambalanduwa solar project and CPC's Rs. 18.2 billion profit over eight months.