Quantum Leap

May 17, 2006 (LBO) – Runaway global oil prices is expected to cost Sri Lanka 2,250 million dollars this year, the government said Wednesday, in a broad hint that a retail fuel price revision was around the corner. Sri Lanka is a net oil importer, with last year's fuel bill climbing up to 1.64 billion dollars, when crude prices averaged at 55 dollars a barrel, up from an annual average bill of 800 million dollars, the finance ministry said.

The country imports around 30 million barrels each year, which is largely consumed to fire expensive thermal power plants and the transport industry.

Last year, the government splashed out 26.1 billion rupees on fuel subsidies, over 14.7 billion reported in 2004, according to finance ministry data

The ministry says oil prices have now inched towards 70 dollars a barrel, due to continuing concerns over the geopolitical situation in major crude producers Iran and Nigeria.

"With the ever increasing oil prices, Sri Lanka's total oil import bill would be around 2.2 billion dollars," the ministry said. "This is a loss of foreign exchange which could be used to provide basic infrastructure."

The treasury now says subsidie