Sri Lanka’s fuel pricing formula determines the Maximum Retail Price (MRP) using cost-based components including import costs, operational expenses, and taxes.
MRP=(V1+V2+V3)+V4
- V1 – Landed Cost: Based on international fuel prices, shipping, insurance, and USD to LKR conversion.
- V2 – Processing Cost: Covers refining and handling expenses.
- V3 – Administrative Cost: Includes operational and overhead costs.
- V4 – Taxation: Includes import duty, excise duty, and levies.
- Cost model: Ensures full cost recovery without subsidies.
- Government role: Final prices may be adjusted before implementation.
- Revisions: Prices change regularly based on global oil markets and exchange rates.