The Hon. Anura Kumara Dissanayake - President, Minister of Defence, Minister of Finance, Planning and Economic Development and Minister of Digital Economy

¶ 01 Hon. Speaker, I thank the Members who brought this Adjournment to discuss the war situation in the Middle East and the challenges States face globally.

¶ 02 At the outset, let me state our unwavering position: neutrality. Our national dignity, justice and international recognition rest on preserving our neutrality. We will not abandon it under any pressure. Some claim we have sided with a camp or failed to decide properly — these are untrue.

¶ 03 On the Iranian naval visits: On 26 February 2026, Iran requested goodwill visits on 9 and 13 March by three naval vessels. We were studying the request. The same evening, the United States requested permission for two naval strike aircraft to land at Mattala from their Djibouti-based naval unit on 4 and 8 March. Two papers were on my desk: one to allow Iranian naval vessels to enter; the other to allow US military aircraft to land. We decided clearly: maintain neutrality — we granted neither request. Had we allowed one, we would have had to allow the other, dragging a distant war into Mattala and Colombo. We refused both and protected the country.

¶ 04 On 27 February, Iran reported a sailor fell and was injured aboard “IRIS Bushehr” and requested to bring him and an officer to Sri Lanka. Under our humanitarian and international obligations, we permitted medical evacuation to Durdans Hospital. The shipping agent brought them; we did not. That is consistent with international practice.

¶ 05 On 4 March, an Iranian vessel in our Exclusive Economic Zone (not territorial waters) was attacked. We could have simply watched, as it was outside territorial waters. Instead, driven by humanitarian obligations, our Navy and Air Force mounted a major operation, following international protocols on surveillance periods and drift distances. We rescued 32 injured and recovered 84 bodies to our shores — that is our humanity and our neutrality.

¶ 06 Subsequently, after the first attack, a second Iranian vessel reported engine failure and requested entry to Colombo Port. Some say we delayed 11 hours; that is false. The initial 26 February request was for goodwill visits on 9 March. The post-attack request to enter due to engine failure came later. Under international law, a belligerent’s warship can be held only up to 24 hours in our waters; beyond that, either they must depart or come into our custody. Allowing extended repair and redeployment would align us with a belligerent. We required the vessel to come under our custody and disembark the full crew. We took 206 naval personnel to a Navy camp, ensured their welfare, provided food and medical care, and medically evacuated one to Welisara. We allowed repatriation of the deceased by air. The 32 injured taken to Karapitiya are now recovered and at Koggala Air Force Base. This is how we maintain neutrality and earn international respect.

¶ 07 A draft resolution on these attacks came before the UN Security Council. Many States supported it, but we did not, because it was incomplete and only half the truth. We consistently take positions of justice and fairness internationally.

¶ 08 Claims that “if rescued 11 hours earlier the first ship would have been saved” are baseless and irresponsible. Do not create narratives that Sri Lanka’s actions caused the loss. We expect responsibility in this House at a critical global juncture.

¶ 09 The US requested to station aircraft at Mattala on 4 and 8 March, reportedly carrying eight anti-ship missiles. Some argue our security understandings with the US compel us to take sides. False. Our understandings cover areas like aviation services, maintenance and training; maritime domain awareness; cyber security and secure communications; and humanitarian assistance and disaster response — as during Cyclone “Micha,” two aircraft arrived under that clause. There is no clause binding us to take sides in war. We denied both the Iranian port call and the US aircraft request, upholding our foreign policy.

¶ 10 On the nature of this war: one side seeks regime change; the other, lacking overwhelming kinetic strength, exerts pressure by targeting global economic arteries — airports, ports, refineries and oil carriers — to create worldwide economic strain as a protective strategy. For Sri Lanka, two areas matter most: energy supply lines built through the region, and our nearly one million workers in the Middle East. We face no internal conflict; our risks are external: potential disruptions to remittances and to energy supply.

¶ 11 We have worked methodically with the Ceylon Petroleum Corporation (CPC). Historically, short-term spot purchases fostered corruption; we shifted to long-term tenders and also explored G2G options. Refined products largely come via Singaporean and Indian firms; no new disruption there. Our main vulnerability is crude supply from Fujairah. Two 90,000 MT crude cargos due around 24–25 March were delayed after the Fujairah incident; a single-tender 90,000 MT cargo was also lost.

¶ 12 Anticipating crude tightness, on 5 March (the war began around 28 Feb), we called a tender for diesel, petrol, kerosene, Jet A-1 and two crude cargos. We opened bids on 17 March and awarded: - Diesel: ETA 6–7 April - Petrol: ETA 16–17 April - Kerosene: ETA 12–13 April - Jet A-1: ETA 10–11 April Crude: invited April and June deliveries; no April bids; one June crude offer accepted. We also floated an additional diesel tender on 18 March for early April. If crude is constrained, we will prioritize imports of refined products.

¶ 13 Separately, private and CPC product arrivals originally due in early April have been postponed. Terminal capacity is tight: a 90,000 MT discharge blocks the berth about eight days; we are sequencing vessels to avoid demurrage while ensuring continuity. We also empowered a technical committee (non-political) to evaluate opportunistic offers amid a developing “black market” for cargos, to match supply dates with our terminal windows. We are prepared to accept some operational risk, even potential short demurrage, to avert shortages.

¶ 14 To support exporters, five licensed bunkering firms offered to supply fuel to export industries; we issued rapid permits for that specific channel.

¶ 15 On Russia: sanctions constraints eased on the 11th; we began discussions promptly. We must balance our significant export exposure to the US with diversification. We will brief the House once inter-State talks mature.

¶ 16 On pricing: domestic prices are driven mainly by USD/LKR and global benchmarks. In 2022–2023, the major driver was rupee depreciation (from LKR 185 to ~372–400 per USD); prices jumped (e.g., Petrol 92 from Rs 137 to Rs 420; Petrol 95 from Rs 161 to Rs 450; Diesel from Rs 104 to Rs 400). Today the driver is global price: from 2 March to 18 March, Petrol 92 up ~55 percent, Petrol 95 up ~65 percent, Diesel up ~74 percent; crude from US$81 to US$114 (~40 percent). A simple rule of thumb: every US$1 increase in oil implies roughly Rs 2 per litre domestically, other things equal. Premiums over Platts have also surged from +US$2.5 to as high as +US$40 (some quotes even +US$318/+358/+458 in abnormal cases) due to war-risk and competition.

¶ 17 Globally, countries have raised retail prices from 6 percent up to about 50 percent (even 68 percent in some). We adjusted by about 8 percent on average so far — comparatively low. However, CPC supplies ~57 percent of domestic volumes; private players ~43 percent. If CPC’s administered price lags market while private firms price at cost, a Rs 100–150 per litre gap could emerge, shifting queues to CPC and choking private supply. We must narrow that gap to sustain total supply.

¶ 18 On fiscal aspects: fuel taxes yield about Rs 20 billion per month; in 2023 CPC’s legacy debt of Rs 884 billion was assumed by the Treasury; servicing its interest alone can cost around Rs 100 billion annually. We must weigh targeted relief versus broad subsidies. Targeting is operationally complex in our largely informal economy — e.g., 30,000 non-registered fishing boats, unregistered micro-operators like “choon paan” vendors. We are evaluating whether to deliver targeted support where feasible or temporary broad measures, alongside the April price formula cycle. The QR code system is being readied so that, ahead of any April 1st adjustment, speculation-driven hoarding is curtailed. Any fuel station violating will face licence cancellation. We are cracking down on black-market stockpiling; 19,000 litres were seized yesterday.

¶ 19 We will not mechanically mirror global spikes if it would cripple the economy and revenue; we will calibrate to preserve activity and essential tax flows.

¶ 20 On LPG: The main supplier under long-term tenders is Litro; a private player has about 20 percent market share. We are breaking entrenched monopolistic “cartels” across sectors (licences, passports, fuels, gas, coal) that thrived for decades under political and bureaucratic protection. That pushback triggers disinformation, but diversification is essential. For LPG, we have diversified sourcing beyond the Middle East; March requirement of 38,000 MT is already contracted and afloat (in a floating storage near Maldives). Another 33,000 MT is discharging now; a further 33,000 MT arrives in April. Some localized shortages occur because we need about 20 percent additional supply to cover private contractual gaps to hotels and industries. Litro is temporarily covering those to keep the economy running.

¶ 21 We temporarily allowed the private supplier, which normally can place only 20 percent of its imports into the local market against exports from its bonded facility, to divert required volumes fully to the domestic market for three months, and to use its Hambantota storage for local supply, to avoid any domestic shortage. Our policy focus is ensuring national supply, irrespective of whether the State or private party imports.

¶ 22 We will continue to diversify supply chains across regions — splitting volumes (e.g., 25–30 percent tranches) to different basins — so disruptions in one area do not destabilize us.

¶ 23 We will act swiftly on fuel price decisions, preserve neutrality abroad, and ensure uninterrupted power and fuel domestically.