Oil Pains

COLOMBO (Dow Jones)–As Sri Lanka’s energy companies wilt under the weight of high oil prices, pressure is building on the government to remove gasoline subsidies and reform inefficient state enterprises. COLOMBO (Dow Jones)–As Sri Lanka’s energy companies wilt under the weight of high oil prices, pressure is building on the government to remove gasoline subsidies and reform inefficient state enterprises. But analysts say reforms will likely be opposed by Marxists who are part of the ruling coalition, leaving the government to choose between political survival and economic reform.

A government official said domestic fuel prices are likely to be revised soon to reflect international prices, as the treasury had to bear heavy subsidy payments last year.

Ceylon Electricity Board (CEB), the state power generation and distribution firm, posted a hefty loss of LKR15 billion ($150 million) last year, as it relied on oil-generated thermal power to produce close to half the island’s electricity requirement.

Ceylon Petroleum Corporation (Ceypetco), the state crude oil refiner and fuel distributor, saw its debt burden mount to LKR23 billion in 2004 from LKR14.9 billion in 2003 due to the government’s