Sri Lanka explores new suppliers to ease fuel shortages

Sri Lanka has started making arrangements to resolve its foreign exchange crisis and resulting fuel shortages by exploring new suppliers to cater to domestic demand.

"Today, I met the visiting [International Monetary Fund] team and commenced discussions. Looking forward to reaching a staff-level agreement and finalising the program soon," the country's prime minister Ranil Wickremesinghe said on 20 June.

Unless Sri Lanka has at least about $3bn, which has to come from the IMF bailout programme, development agencies and investments, it will be difficult to work with any oil-producing country, said energy minister Kanchana Wijesekera on 16 June.

Sri Lanka has reached out to every possible country that produces oil, Wijesekera said. "But when you have a bad record… and you have $735mn outstanding in [payment of] fuel supplies, any new supplier would be reluctant to even talk to you," he added.

Even if any companies or countries are willing to work with Sri Lanka, opening a letter of credit would be difficult because of its foreign exchange crisis. But "we have successfully opened up two letters of credit," said Wijesekera. These are all new suppliers that have never been through the Sri Lankan procurement process, so it may take about a month to finalise some of the supplies, he added, without providing further details.

Sri Lanka depends heavily on fuel imports as it consumes around 110,000 b/d of oil products, while its sole 50,000 b/d Kelaniya refinery produces only around 35,000 b/d. The refinery resumed production on 2 June, Wijesekera said, after it was closed in late March.

The government is separately expecting to receive two fuel consignments — one diesel and the other gasoline — by around 24 June. The origin and volume of these cargoes are unclear.

"There is one more consignment that we are negotiating and [it] could arrive a little early as it is moving from India, and we have already secured finance for it," Wijesekera said. The island nation received 298,000 bl of diesel from India on 16 June, the last consignment under its current credit line with India.

Discussions have also been held regarding work-from-home arrangements for both the government and private sectors — at least for a 10-day period, without specifying the exact start date — in order to deal with the fuel shortages in the country, said Wijesekera. "It doesn't mean a lockdown where you lock everyone down and say not to come out on the roads. But we are going to encourage people to work from home so they will not use more fuel."

By Pratima Pareek