Sri Lanka struggles to pay for fuel imports after surge in crude prices
Sri Lanka’s fuel import plans have been disrupted by a rapid spike in global crude prices after Russia’s invasion of Ukraine, leaving the crisis-hit island nation struggling to pay for diesel amid power cuts as fuel pumps run dry, officials said.
With foreign reserves plummeting 70% in the last two years to just $2.36 billion by the end of January, Sri Lanka faces its worst economic crisis in years as crude stands at about $130 a barrel, or a near doubling since early December.
“We are facing a very challenging situation,” K.D.R. Olga, the secretary of the energy ministry, told Reuters on Wednesday.
After the cost of an incoming shipment of 38,000 tonnes of diesel jumped by 47% to $50 million over the last week, she said, it could prove tough for the government to quickly source adequate dollars to pay for further imports.
Analysts estimate Sri Lanka’s useable reserves at only about $800 million, leaving President Gotabaya Rajapaksa’s government scrambling to pay for essential imports of fuel, food and medicines.
The oil price spike has crippled the government’s fuel import strategy, said two sources with direct knowledge of the initial plans.
“Our projections were based on fuel prices hitting $100 per barrel by mid-March,” said one of the sources, who spoke on condition of anonymity. “We did not plan for the war.”
The finance ministry and Rajapaksa’s office declined to comment.
PRICE RISE LIKELY
Since mid-February, rolling power cuts have hit businesses and homes across the island, some for as long as seven hours.
Commuters often wait in long queues outside fuel pumps in Colombo, the commercial capital, where hundreds of bakeries have run out of gas, driving up the price of bread.
The fuel shortages have disrupted consumption and daily diesel distribution has nearly doubled to 10,000 tonnes from about 6,000, Olga said.
“Rapid distribution has reduced the rush to some level,” she added. “But we only have stocks for immediate needs.”
Sri Lanka typically requires about 120,000 tonnes of diesel and 75,000 tonnes of petrol each month.
During the shortage, state-run Ceylon Petroleum Corporation (CPC) has held talks with the government to raise prices, its chairman, Sumith Wijesinghe, said.
“We are losing 50 rupees per liter of diesel and 22 rupees from every liter of petrol,” Wijesinghe told Reuters. “We are discussing a fresh pricing mechanism as we cannot continue at these prices.”
The other major fuel retailer, Lanka IOC, has already raised prices twice this year.
Welcome to the foretaste of a world without China and Russia. Which of the great countries now think about countries like SL that is going bankrupt due to their actions? Do they help us? The world controlled by EU, UK, USA will be like the time of the Roman Empire for the other countries.
For once I agree with Ranil. We should support Russia (just follow the Indians). Russia did not invade Ukraine to kill Ukrainian civilians. It invaded because it’s joker president going to bring NATO weapons on the other side of the fence. He gambled and failed. That is why few times a day he cry and blame the West for having blood on hands for the civilians die in Ukraine and doing his best to drag NATO to a war with Russia. On the other hand the West is using the joker president as a cat’s paw to ruin Russia. If they could do it, then they will turn to China. Don’t forget, during the Gorbechev’s time Russians tasted the Western friendship and so called democracy and rejected it.
Ha Ha, Indra Akke,
Ukraine’s Joker President?
He was brought to power by 73% of the vote.
His approval rating in the past few weeks has risen to > 91%.
It is not the ‘Joker’ President; it must be a ‘Joker’ population.
Shame you are siding with the toothless Dinosaur, RW.
Actually, he is > 75% responsible for the state of our Nation, today.
Go and offer a well packed watti of offerings to Kali Amma and pray for a better time and a better president for Sri Lanka. Try to export some Dhammikayage Anti-COVID Thailaya to West you highly talked if and earn some of the millions of foreign exchange he promised.
Thank You Indra Akke for your comment,
Kali Amma is ultra-reliable compared with the evil faced Head of the WHO and Bill Gates who cheated the World with their purported Vaccines for CV19.
CCP released the virus and evil faced Head of the WHO and Bill Gates made money on the miseries of the World population.
Dhammika, in his own small way, attempted to do that too.
The only way to conquer the virus released by the CCP is to enhance your own personal hygiene standards; simple things like washing your hands, avoiding poorly ventilated premises where people gather, removing and cleaning footwear before you enter your home and also, change and wash clothes, regularly..
Live the dream until an end come to your pathetic life Roxie. Remember to remove and wash your footware well before entering home. You can add the photo of the Ukranian president with 91% approval rating to next to Kali Amma and light extra incense stick. To me that was a leader under his watch 2 million of citizens had to leave the country as refugees and lost homes to date and major cities are pulverizing before the Russian attack. Good leaders don’t lead to their nation down that road after all.