Sri Lanka transport costs to rise with Euro 4 standard engines, fuel

ECONOMYNEXT – Sri Lanka’s transport sector costs will rise with the ban on the import of vehicles falling below Euro 4 standard and the more expensive fuel required operate them will also push up running costs, a heavy vehicle firm has warned.

Euro 4 standard vehicles will require more expensive engines, Lanka Ashok Leyland, a publicly listed company, which sells trucks and buses in Sri Lanka said.

"Higher initial investment in purchase of the vehicles and use of cheaper fuels in vehicles replaced by super diesel as required by EURO 4 engines will adversely impact running costs and profitability of the sector," Chief Executive Umesh Gautam told shareholders.

Sri Lanka on July 1 started selling EURO 4 standard 95-Octane petrol and Super Diesel, while the 2018 budget has plans to restrict vehicle imports to only those having EURO 4 standard engines.

For the time being 92-Octane petrol and standard diesel is available for older vehicles.

"The transportation sector this year will see the impact of the EURO 4 standard implementation coming into play in July," Gautam said.

"We commend the government in its efforts to go green however commercially, transportation business models run on very thin margins and are cost sensitive."

Lanka Ashok Leyland has responded to the changes in the law with a new investment in a workshop, he said.

"Boosting our workshop income, we have invested in a state of the art engine recondition workshop to service older engines while preparing for the newer EURO 4 compliant engines."

Transport service providers however also have to deal with monthly changes in fuel pricing under a new formula. (COLOMBO, 22 July, 2018)

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