While Advocata Institute welcomes the recent Liquefied Petroleum Gas (LPG) price increase by Litro Gas Lanka, it remains inadequate and indirectly forces Sri Lanka’s vulnerable segments to subsidize wealthier LPG consumers.

This inequity arises because the retail price remains below cost-reflective levels despite the price revision. In April 2026, Saudi Aramco’s Asia-Pacific benchmark rose sharply, adding approximately Rs. 1,000–1,200 to the landing cost of a standard 12.5kg cylinder. The retail price, however, was increased by only Rs. 775, leaving a shortfall of approximately Rs. 225–425 per cylinder.

The gap is currently covered through cross-subsidization, where industrial users are charged higher prices than households. In practice, these costs are often passed on to consumers, as Sri Lanka’s protectionist trade regime allows local companies to do so without losing market share. As a result, households ultimately bear the burden through higher prices on everyday goods.

However, the benefits of this subsidy are concentrated among higher-income households. According to the 2024 Census of Population and Housing, LPG is used for cooking by 42.4% of households nationally, while 55.4% still use firewood. The 2019 Household Income and Expenditure Survey (HIES) further shows that nearly 80% of households in the highest expenditure tier use LPG, compared to less than 8% in the lowest-income tier. As such, the subsidy primarily benefits wealthier households, while its costs are indirectly borne by the broader population – including those who do not consume LPG.

Beyond this inequity, the cross-subsidization model creates two economic risks. First, artificially low prices can discourage conservation and the transition to alternatives such as firewood and briquettes. This sustains LPG demand and contributes to ongoing pressure on foreign exchange reserves. Second, pricing below cost creates an artificial price ceiling. Private sector competitors, unable to match the subsidized prices, risk being driven out of the market. This discourages new entrants and limits investment in the sector.

Advocata Institute urges the government to replace this cross-subsidization model with a fully cost-reflective pricing mechanism. Targeted cash transfers should be utilized to ensure that assistance reaches vulnerable households, while avoiding the inefficiencies of subsidies that disproportionately benefit higher-income groups.

Advocata Institute is an independent policy think tank in Sri Lanka that advocates for economic development through free markets

Financial support for housing project for families affected by Cyclone Ditwah

People’s Bank has come forward to donate Rs. 300 million to the ‘Government’s Rebuilding Sri Lanka Fund’ to support the development of a multi-storey housing project in the Nuwara Eliya District, which is being constructed to resettle families affected by Cyclone Ditwah.

This initiative, undertaken in commemoration of the Bank’s 65th anniversary, forms a key component of its Mahajana Mehewara Corporate Social Responsibility (CSR) programme, reinforcing its commitment to supporting communities and promoting sustainability.

The symbolic cheque for the donation was handed over at the Presidential Secretariat by People’s Bank CEO/GM Clive Fonseka and People’s Bank Chairman Prof. Narada Fernando to the Secretary to the President, Dr. Nandika Sanath Kumanayake. Head of Marketing Nalaka Wijayawardana was also present at the occasion.

Cyclone Ditwah, which struck in November 2025, along with the subsequent landslides in the Nuwara Eliya town area, caused extensive damage to residential properties and displaced numerous families. In response, the Ministry of Housing, Construction and Water Supply initiated a permanent housing programme to provide secure and sustainable living conditions. The contribution by People’s Bank highlights the national importance of this initiative and underscores the Bank’s continued role in supporting post-disaster recovery and community resilience.

The proposed development comprises of a fully integrated multi-storey housing complex designed to ensure both comfort and long-term sustainability. The residential component will consist of three multi-storey blocks, offering a total of 120 housing units, with 40 units allocated per block.

In addition to housing, the project incorporates comprehensive infrastructure and community facilities to support a holistic living environment. Planned infrastructure includes internal road networks, dedicated parking facilities, a wastewater treatment plant, and solar-powered outdoor lighting systems. Community-oriented amenities will feature a health centre, day-care centre, commercial outlets, a community centre, a children’s play area, a condominium management office, and a fully operational banking unit. Each block is expected to be completed within approximately a six-month construction period, enabling the timely resettlement of affected families.

Design and consultancy services for the project will be undertaken by the State Engineering Corporation, ensuring adherence to national standards and best practices in construction and urban planning.

As Sri Lanka’s largest bank in terms of customer base and the branch network, People’s Bank has consistently extended its services beyond banking to support impactful CSR initiatives. Guided by its enduring ethos, “Pride of the Nation”, the Bank continues to play a transformative role in uplifting communities and contributing to sustainable national development.

Hayleys PLC, Sri Lanka’s leading diversified conglomerate, has announced that its LKR 9 billion Rights Issue has been oversubscribed by over LKR 2 billion, reflecting strong investor confidence in the Group’s financial strength and growth prospects.

The Rights Issue of 45,000,000 new ordinary voting shares was offered at an issue price of Rs. 200 per share, in the proportion of three new shares for every fifty existing shares held.

The proceeds from the Rights Issue will be strategically deployed through a disciplined allocation of capital intended to fund high-growth, future-focused investments. This strategic move further strengthens Hayleys’ financial flexibility and capital structure, channelling fresh capital into growth-oriented assets while reinforcing long-term stability.

By strategically expanding into the modern trade retail segment and scaling renewable energy projects, Hayleys is diversifying its revenue streams to ensure long-term earnings resilience. The continued strengthening of export-oriented verticals is set to drive vital foreign currency inflows, improving profitability through access to larger international markets. Collectively, these initiatives are engineered to accelerate return on invested capital, ultimately driving sustainable shareholder wealth through long-term value creation.

Hayleys PLC carries a National Long-Term Rating of ‘AAA (lka)’ with a Stable Outlook from Fitch Ratings Lanka Limited, recently reaffirmed, the highest credit rating on the Sri Lankan national scale.