Pricing policy of auto-fuel: the case of sri lanka

Abstract

Pricing of auto-fuel (petrol and diesel) has been a subject of debate among policy makers, administrators, politicians and multilateral agencies in Sri Lanka. Auto fuel pricing policies adopted by successive governments over the past four decades have been influenced by welfare oriented political economy considerations rather than market factors and environmental considerations. This has led to significant changes in the structure of vehicle population, fuel consumption patterns and vehicular emission levels. This paper deals with these issues with special emphasis on distributional and environmental implications of auto-fuel pricing.