June 04, Colombo (LNW): Sri Lanka is expected to see a significant decline in fuel import expenditure over the coming months, with authorities projecting a notable reduction in foreign currency outflows linked to petroleum purchases.
Speaking on the country’s fuel procurement programme, Ceylon Petroleum Corporation (CEYPETCO) Chairman D.J. Rajakaruna stated that fuel imports had placed a considerable burden on finances in May, when expenditure reached approximately US$ 520 million. However, the monthly import bill is forecast to fall steadily, reaching around US$ 198 million by July.
According to Rajakaruna, the unusually high spending stemmed from procurement decisions made earlier in the year. In April, the CEYPETCO secured eleven fuel cargoes, more than double the average monthly requirement of five shipments, which typically includes two consignments of crude oil for refining operations.
He explained that the additional purchases were necessary to maintain adequate fuel reserves at a time when refinery operations faced challenges due to limited crude oil availability. At the same time, electricity generation requirements increased sharply, leading to higher demand for diesel-powered generation.
The Chairman noted that elevated temperatures and prolonged dry weather conditions resulted in a surge in electricity consumption, particularly during evening hours. With hydropower output constrained by reduced water levels in reservoirs, thermal power generation played a greater role in meeting demand. As a result, one entire diesel shipment imported during April was reportedly utilised solely for electricity production.
Fuel import costs have already begun to decline, dropping to an estimated US$ 318 million in June. Authorities expect this downward trend to continue as procurement levels return to normal and energy demand stabilises.
Rajakaruna added that lower fuel import expenditure could provide relief to the country’s foreign exchange position and help ease pressure on the Sri Lankan rupee, contributing to greater stability in the months ahead. He also expressed optimism that improved planning and more balanced energy generation could help contain fuel-related costs over the longer term.
