Sri Lanka is gradually easing the fuel crisis with the receiving of emergency oil supplies from India and the situation will be further improved after restarting the Sapugaskanda oil refinery using Russian crude oil purchased by paying $US72.6 million.
The government has paid US$ 72.6 million to buy a 90,000-tonne shipment of Russian oil docked at Colombo’s port for weeks, , as the island nation works to restart its only refinery and address a crippling energy crisis,Energy Ministry said. .
Sri Lanka has struggled to pay for fuel, food and medicine imports due to a severe shortage of foreign currency. An unprecedented financial crisis has also forced the country to default on some external debt.
Like the rest of Asia, Sri Lanka wants to shift to long-term crude tenders to hedge against high crude spot prices, but dwindling foreign exchange reserves have hampered its ambitions, the power minister said on Saturday.
“I have reached out to multiple countries, including Russia, for support to import crude and other petroleum products,” Power and Energy Minister Kanchana Wijesekera disclosed..
The 90,000-tonne consignment was ordered through Dubai-based Coral Energy, Wijesekera said, adding that the payment would facilitate restarting the country’s sole refinery, which has been closed since March 25.
“The next shipment will also be ordered from the same company. Another consignment will be needed within the next two weeks to keep the refinery running continuously,” Wijesekera said.
Queues of two-wheelers and cars outside fuel stations, sometimes miles long, have become a familiar sight for Sri Lankans this year, with high global oil prices exacerbating their misery.
Wijesekera estimates that Sri Lanka will need $US568 million to pay for a dozen fuel shipments needed in June.
The country is struggling to pay $US31 million for a furnace oil shipment docked at Colombo’s port. State-run Ceylon Petroleum Corporation (CPC) needs $US735 million to clear letters of credit for previous oil purchases.Total foreign reserves were $US1.82 billion at the end of April.
Protests have rocked Sri Lanka in recent days, with demonstrators demanding the resignation of President Gotabaya Rajapaksa over the financial crisis.
Minister of Power and Energy Kanchana Wijesekara says 1,000 metric tonnes of diesel are expected to be produced daily from the Sapugaskanda Oil Refinery once it recommences operations.
Meanwhile, a Siberian shipment that arrived in Colombo began unloading the product yesterday.With speculations rife that the shipment was from Russia due to the product being Siberian oil, Power and Energy Minister dismissed the claims stressing that the supplier is a Dubai-based company.
The procurement of the Siberian crude oil shipment was arranged before he took office, the minister added.The order for this crude oil shipment was placed after opening a non-resident rupee account (NRRA), he explained.
The minister said there is a tri-party agreement between the supplier, the bank and the Ceylon Petroleum Corporation (CPC), according to which the money is deposited in rupee terms.
He added tha the Central Bank governor has given undertaking to convert the rupee amount to dollars for the payment after a 30-day period or a 60-day period as agreed with the supplier.
The next shipment of crude oil will also be procured under the same basis “because we need another crude oil consignment in the next couple of weeks to keep the Sapugaskanda oil refinery going,” the minister said further.
However, the government wants to enter into long-term contracts and accordingly a tender procedure has commenced already, the minister said, pointing out that this will be a less burden on the Ceylon Petroleum Corporation and the Treasury if the government can enter into a similar agreement with the companies that are willing to provide crude oil with the financial restrictions that are in place.
Speaking further, he confirmed that Sri Lanka has sought assistance from Russia. The minister has made an official request from the Russian ambassador to Sri Lanka during a recent meeting.
Giving an update on the fuel stocks in Sri Lanka, the minister said Sri Lanka has necessary fuel stocks to last the next two weeks. In a tweet posted earlier today, he said 17,077 MT of diesel, 1,072 MT of super diesel, 37,391 MT of 92 Octane Petrol, 6,142 MT of 95 Octane Petrol, 2,437 MT of JET A-1 aviation fuel are available in the country as of today.
