Sri Lankan fuel stocks slump as currency crisis worsens

Sri Lanka needs $75mn of foreign currency to help pay for urgent fuel imports as a foreign exchange crisis leaves it with just one day's worth of gasoline stocks, prime minister Ranil Wickremesinghe said.

"At the moment, we only have petrol stocks for a single day. The next couple of months will be the most difficult ones of our lives," Wickremesinghe said on 16 May.

One diesel shipment was delivered to the country on 15 May and another two shipments are scheduled to be delivered under a credit line with India on 18 May and 1 June. Two gasoline shipments are due on 18 May and 29 May, he said, without giving details.

"We are working to obtain dollars in the open market to pay for these shipments," Wickremesinghe said.

But energy minister Kanchana Wijesekera said today that the country does not have enough foreign currency to pay for a shipment of gasoline that is waiting offshore. Sri Lanka owes $53mn for a previous gasoline shipment, and the latest cargo will only be unloaded after that payment is made, he told parliament.

Wijesekera said diesel is being supplied to service stations but urged consumers not to line up for gasoline.

Data from Vortexa show one Handymax vessel carrying 290,000 bl gasoline is due to arrive in Colombo on 19 May, a day later than previously scheduled. Three other Handymax vessels carrying a total of 760,000 bl of gasoline are due in Colombo on 20-22 May. Almost all the gasoline was loaded from India, the data show.

Sri Lanka is facing its worst foreign exchange crisis since gaining independence in 1948, sparking widespread protests over shortages of food and fuel. Shortages of oil — which generates a quarter of the country's electricity — risk power outages of up to 15 hours a day, Wickremesinghe said.

India offered Sri Lanka a $550mn line of credit to purchase oil products in January. The country also received $400mn from India under the South Asian Association for Regional Co-operation currency swap framework.

Sri Lanka depends heavily on fuel imports to meet domestic demand of around 110,000 b/d. Its sole refinery, the 50,000 b/d Kelaniya plant that produces around 35,000 b/d of oil products, closed in late March.

Wickremesinghe, who was appointed prime minister on 12 May after protests forced the resignation of his predecessor, said the country's central bank would have to print money to pay state employees and pay for essential goods and services, even at the risk of a further depreciation of the rupee. He also proposed privatising state-owned Sri Lankan Airlines.

The effects of the Covid-19 pandemic and the fallout from hostilities in Ukraine have made it impossible for Sri Lanka to meet its debt obligations, the country's finance ministry said last month.

By Pratima Pareek and Kevin Foster