Transition to weekly fuel pricing urged to mitigate market distortions

​Sri Lanka’s retail fuel sector could significantly benefit from a shift toward weekly price revisions to iron out severe market distortions caused by abrupt, large-scale price adjustments. 

Moving away from the current monthly pricing cadence is seen as a highly necessary interim measure to stabilize the local market while the country develops the required infrastructure for a more dynamic, daily pricing mechanism.

​Leading market expert Murtaza Jafferjee highlighted that implementing significant price changes in a single, infrequent step inherently creates operational bottlenecks and supply chain inefficiencies. He noted that retail fuel stations frequently manipulate their supply in anticipation of these periodic adjustments. Dealers often restrict daily sales to artificially build inventory ahead of an expected price hike or, conversely, run down their existing stocks when prices are forecasted to fall. This speculative behaviour at the retail level routinely leads to temporary shortages, frustrating motorists and disrupting commercial transport networks.

​While advocating for a highly dynamic pricing model, Jafferjee acknowledged the practical limitations currently facing the local industry. He stated that although daily pricing remains the ideal economic scenario to accurately reflect real-time global market fluctuations, implementing such a system immediately would necessitate substantial technological and infrastructure upgrades across retail fuel stations nationwide. Therefore, transitioning to weekly price revisions would serve as an effective, immediate interim step to substantially reduce the existing market irregularities.

​From an analytical perspective, adopting a weekly pricing mechanism would introduce much-needed stability to consumer expectations and smooth out broader macroeconomic impacts. Smaller, more frequent adjustments help absorb inflationary shocks, preventing the sudden and severe spikes in transport and logistics costs that currently cascade through the supply chain following a major monthly revision. Furthermore, for retail fuel operators, weekly price adjustments would significantly reduce the working capital risks associated with holding large volumes of volatile stock, ultimately fostering a more efficient, predictable, and reliable energy distribution network.

(NF)