Sri Lanka raises gasoline price to record to cut losses

A worker fills up a bottle at a Lanka India Oil fuel station in Colombo November 1, 2011.

COLOMBO (Reuters) - Sri Lanka increased the price of gasoline by 6.7 percent on Saturday to a record level to prevent state-run Ceylon Petroleum Corporation (Ceypetco) suffering further losses, an official said.

Sri Lanka raised the price of a litre of gasoline by 10 rupees to 159 rupees, a record high level in terms of the local currency.

Susantha Silva, the managing director of Ceypetco said the state-run firm's losses stood at 75 billion rupees at the end of October because of the failure to pass the world market oil price on to consumers.

Silva, however, said Ceypetco would still lose 5 rupees a litre despite the price increase on Saturday.

Sri Lanka's only private sector fuel retailer, Lanka IOC PLC LIOC.CM, a subsidiary of Indian Oil Corporation Ltd (IOC.NS) increased its gasoline price in line with the state-run firm.

In February, Sri Lanka raised the price of gasoline by 8.8 percent, diesel by 36.9 percent, and kerosene by 49.3 percent to reduce the losses and curb cheap imports in the wake of a falling rupee, which has depreciated more than 14 percent since then.

Sri Lanka also faces constraints in importing cheap crude oil from Iran in the face of sanctions on Iran imposed by the United States because of its nuclear programme.

Sri Lanka's only 50,000 barrel-per-day refinery is designed predominantly to refine Iranian light crude, though crudes from Oman and Saudi Arabia can also be refined at a lower refining efficiency. (Reporting by Shihar Aneez and Ranga Sirilal)