Feb 13, 2012 (LBO) – A steep fuel price increase in Sri Lanka to correct mounting economic imbalance and pressure on a currency peg has seen protests by bus operators and fishermen, reports said. Fishermen blocked a road on the main road to the capital Colombo from Negambo, a fishery centre, a media report said.
Sri Lanka raised the price of kerosene by 35 rupees to 106 rupees a litre Saturday, and Diesel from by 31 rupees to 115 rupees, both fuels used by fishermen.
Sri Lanka does not have an automatic price formula to change prices based on cost, but sale prices arbitrarily changed by rulers based on political expediency.
When prices are held down for long periods, Sri Lanka’s rupee peg comes under pressure, partly due to heavy borrowings from the banking system by energy utilities to buy dollars, putting pressure on both inflation and the rupee peg.
Sudden price corrections then lead to protests.
Commuters were stranded on roadsides Monday after a key bus operators’ union kept buses at home
Sri Lanka’s The Island newspaper quoted Lanka Private Bus Owners’ Association President Gemunu Wijeratne as saying that they wanted a 17 percent fare hike of diesel