ECONOMYNEXT – Despite a reduction in global oil prices, Sri Lanka will not be able to reduce fuel prices due to term tenders, Deputy Finance Minister Anil Jayantha said.
“If we can stop the term tenders and go for spot tenders, then of course, the price would come down. But it is not possible. They are in respecting the procurement processes,” the Deputy Minister told reporters at a media briefing on Friday.
“Because with the term tender, some of the stocks that will come in a couple of months’ time are based on the last month’s the prices and not the current prices.”
Sri Lanka has raised the fuel prices around 50 percent since the Middle Eastern escalation started on February 28.
Term tenders or long-term contracts function as strategic, long-term legal partnerships aimed at securing supply certainty over a prolonged horizon, typically spanning six months, a year, or even multiple years.
In a term tender, the buyer secures a guaranteed volume commitment from a supplier to ensure consistent, scheduled deliveries over the contract period.
The pricing is rarely fixed; instead, it is bound to a dynamic mathematical formula tied to international energy benchmarks (such as S&P Global Platts) plus an agreed-upon fixed premium or differential.
“If we can stop the term tenders and go for spot tenders, then of course, the price would come down. But it is not possible. They are in respecting the procurement processes,” the Deputy Minister told reporters at a media briefing on Friday.
“Because with the term tender, some of the stocks that will come in a couple of months’ time are based on the last month’s the prices and not the current prices.”
Sri Lanka has raised the fuel prices around 50 percent since the Middle Eastern escalation started on February 28.
Term tenders or long-term contracts function as strategic, long-term legal partnerships aimed at securing supply certainty over a prolonged horizon, typically spanning six months, a year, or even multiple years.
In a term tender, the buyer secures a guaranteed volume commitment from a supplier to ensure consistent, scheduled deliveries over the contract period.
The pricing is rarely fixed; instead, it is bound to a dynamic mathematical formula tied to international energy benchmarks (such as S&P Global Platts) plus an agreed-upon fixed premium or differential.
