With its creditworthiness shot, the Sri lanka government is buying oil at spot prices, that is, the going rate as container ships pull into port causing millions of dollars for demurrages and overpayments for consignments.

Recently, as a tanker docked outside Colombo Port , the price of its diesel cargo increased from $35 million to $50 million,official sources said.

The Ceylon Petroleum Corporation (CPC) has lost millions of US dollars in fuel purchases by resorting to spot buying from the market even though there is a US$ 500 million Indian credit line to import petrol and diesel.

The over-payments for fuel consignments and demurrage for the delay in clearing shipments due to difficulty in finding dollars along with irregularities of corrupt officials were some of the reasons for these losses, an official observation report revealed.

It has been observed that the CPC has also paid a sum of US $22 million as over-payments for four consignments of fuel procured under spot purchasing recently.According to official documents relating to the payment of a recent shipment of fuel, the pre invoice of the payment received on March 22 has indicated the price of the fuel consignment as $52 million.

But the final invoice sent thereafter has stipulated the price of the same consignment as $39 million. Ignoring the final invoice, the CPC has paid $52 million in settling the payment of the shipment on April 24, paying $13 million more than the last stipulated amount.

Another sum of $9 million over-payment had been paid for three other fuel consignments totaling $22 million, the report indicated. Further a sum of $4.2 million had been paid as demurrages by the CPC for shipments delayed at the port since this government came into power.

The CPC paid $558,000 for a recent consignment of petrol imported from Vitol Company under short term spot purchasing, it added. It has been revealed that this money could have been saved if the authorities expedited the fuel shipments under the Indian credit line, it said.

The Energy Minister has called for a comprehensive report on losses in spot purchases including demurrages and over-payments made by the CPC, a senior ministry official said. Delivering on India’s commitment to the people of Sri Lanka, close to 40,000 MT of petrol reached Colombo on Wednesday, the Indian High Commission in Colombo said.

With this Sri Lanka has received around 440,000 MT of various types of fuel from India with more to follow, it said in a Twitter message.

Sri Lanka is facing a shortage of diesel as the ongoing economic crisis worsens in the island country, Minister of Power and Energy Kanchana Wijesekera said on Thursday.The Minister told Parliament that the country needs 4,000 metric tonnes of diesel per day

However, the state-owned Ceylon Petroleum Corporation is currently only releasing 1,000 to 1,500 metric tonnes a day.

Currently there is no shortage of petrol supply in the country, he said, adding that around 3,000 metric tonnes of petrol has been released on a daily basis, and that a ship carrying 40,000 metric tonnes of petrol arrived in Sri Lanka on Wednesday night.

Sri Lanka has been suffering a diesel shortage since February, which led to hours of daily power cuts.

Asian Development (ADB) Fifty-Fifth Annual Meeting scheduled to be held in Colombo is to be postponed indefinitely from 5 to 8 September 2022 due to present socio-economic crisis in the country , Finance Minister Ali Sabri said.

It is unfortunate that the ADB Annual Meeting which was to be held in Colombo later this year had to be postponed to a later year in light of the current pressing circumstances, he disclosed.

It was a decision which was made after considering all the factors and in discussion with the stakeholders given the economic situation that Sri Lanka has been placed in,” Sabry said.

Finance Minister and Chair Ali Sabry made this revelation when he virtually kicked off the 55th Annual Meeting Business Session of the Board of Governors of the Asian Development Bank (ADB) recently.

This decision has been taken in consultation with the Government of Sri Lanka, and in view of the continuing challenges posed by the current socio economic crisis situation in the country , adb disclosed.

ADB and the Government of Sri Lanka will continue to monitor the situation with regard to COVID-19 and make any adjustments as appropriate, it added.

.He said Sri Lanka is currently going through a period of unprecedented economic issues. Even though there were fiscal decisions made that have contributed to this, this situation has been aggravated by certain factors which have been beyond control of the Government.

A primary factor that set off this chain reaction was the COVID-19 pandemic and its resulting effect on the global economy. Sri Lanka has relied heavily on tourism to bring in its foreign inflows, and the pandemic effectively stopped that source of income almost overnight, he pointed out.

Sabry said Sri Lanka was slowly coming out of this difficult situation but was consequently hit with the devastating effect of the Russia-Ukraine war.

The skyrocketing price of oil due to the war created an unexpected and unbearable hit on the already struggling economy, and there was very little Sri Lanka could do.

This coupled with inflation, another global problem, has all but put our nation in a place of economic hardship on a scale not experienced before.

“It is in these circumstances that Sri Lanka started discussions with the IMF towards a debt restructure and also with its bilateral and multilateral creditors towards finding a workable solution.

The government has already put in place measures to drive our nation towards reform and a sustainable path including the revision of interest rates and commencing the process to retain a Financial Advisor and a Legal Advisor to move ahead,” the Finance Minister said.

Sri Lanka’s political turmoil and economic crisis have brought about a catastrophic food shortage, with the nation’s 21 million residents now forced to pay triple for basics like rice, sugar, lentils and milk powder.

The cause of the crisis stems back to Sri Lanka not having enough money to adequately pay for heavily-relied upon imports. The nation’s foreign currency reserves — money held by Sri Lanka from other countries, like United States dollars or Indian rupees — have dropped by 70% over the past two years.

A Sri Lankan economic expert, said financial mismanagement by the present government and the devastating impact of the COVID-19 pandemic put Sri Lanka in the precarious economic position in the first place. 

“Instead of forcing its citizens to starve, the government needs to enact structural reforms economists have been recommending for years,” he said adding that  “It must lift its suffocating import restrictions and raise taxes on those who can afford them.”

At present Sri Lanka is expecting a severe food shortage. The authorities are yet to find solutions to the upcoming food shortage and cite the dollar crisis as the reason behind not being able to find a solution to the issue.

Very soon there will be no food items in the market for people to buy. Even now there are some essential food items which are not found in the market because of the lack of dollars which   is needed to release the imported food stocks stored in vessels stuck at the port. People are force to live amidst these problems.

 Small businesses are unable to import food. However some businesses and racketeers importing food in large scale were given dollars to import essential food items. Some of them are only focused on their commission even amidst  the crisis,” Thushan Gunawardene Former Executive Director CAA said.

 There is a scarcity of certain essential food items already such as garlic, onions, mung beans, cowpea, chickpeas, dhal, coconut oil, milk powder, dried fish, fish, meat varieties, corn, wheat flour and rice. 

Even if they are imported, given the prevailing dollar crisis, their prices keep increasing daily. A kilo of mung beans is 1000 rupees whereas rice costs more than 200 rupees a kilo. Coconut oil costs around 800-1000 rupees and a kilo of dhal has increased to 600 rupees. A kilo of imported milk powder costs around 2000 rupees. 

With the recent price hike of wheat flour, a loaf of bread costs 150 rupees. The problem however is the lack of essential food items despite price hikes. 

Traders and importers increase prices of food items daily claiming that the rupee has depreciated against the dollar. The Consumer Affairs Authority (CAA) and the responsible state authorities turn a blind eye to these matters. 

There is a scarcity of food items in shops around the country. People are queuing up in search of food.