Clean Air at Risk? Treasury reclaims emission test fund assets
The future of Sri Lanka’s Vehicular Emission Test Trust Fund (VETTF) remains uncertain with far-reaching fiscal reforms by the Treasury aimed at bringing decentralised public funds under the consolidated fund, raising fears over the fate of an important environmental initiative.
This comes after the enactment of the Public Financial Management Act No. 44 of 2024, which called for the elimination of independent public funds managed by departments and ministries and consolidating all the resources to the Treasury
While the move is aimed at tightening fiscal discipline and improving financial oversight, it has placed the VETTF—a critical player in vehicular emission regulation—under immediate threat.
A portion of the VETTF (10 per cent) is remitted to the DMT Emission Trust Fund, which supports the overall Vehicle Emission Testing (VET) programme. The balance 90 per cent is allocated to the vehicle testing service providers.
While exact figures are not publicly disclosed, annual revenue from the emission testing programme have been estimated to exceed Rs 1.5–2 billion, depending on testing volumes and vehicle registrations.
A senior Treasury official clarified that while the fund is not being “abolished,” it must, under the new law, be dissolved and its financial assets transferred to the Treasury.
“It is a statutory requirement,” he said adding funds cannot remain independently managed by departments.
The Motor Traffic Department of (MTD), which oversees the fund, confirmed the directive was issued via a Treasury circular.
A department official, who wished to remain anonymous, noted that the VETTF is one of many trust funds now deemed non-statutory and unconstitutional, and must be transferred by August 25.
Since its inception in 2008, the VETTF has played a pivotal role in managing Sri Lanka’s vehicle emission testing programme.
Financed through a 10 per cent levy on emission tests conducted by private companies, the fund supports a range of activities including auditing emission testing centres, on-road vehicle checks, public awareness campaigns, technician training, and research into air quality improvement.
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