Shortage of petrol and diesel have aggravated economic crisis in Sri Lanka so the government has decided to end duopoly and aloe oil-producing countries to import and sell fuel, declared by power and energy minister on Tuesday. The cabinet decision came as the minister, Kanchana Wijesekera, headed to Qatar and a ministerial colleague was due to arrive in Russia on Sunday for talks on energy deals.
Sri Lanka is going through its worst economic crisis since its independence, having very low foreign exchange reserves which according to the central bank are $1.92 billion, though analysts estimate much lower level. The island of 22 million people is struggling to pay for essential imports of food, medicine and, most critically, fuel.
Data released by statistics department on Tuesday showed that Sri Lanka’s economy contracted by 1.6 per cent in January to March, and analysts have stated that due to political uncertainty and rising inflation this growth can reach up to 5 percent contraction in the second quarter. The government has closed all schools for two weeks and full supplies are only allowed for essentials like health, train and buss as the stock will last only for one more week or so based on regular demand.
Wijesekera said on Twitter, “Cabinet Approval was granted to open up the Fuel Import and Retail sales market to Companies from Oil producing Nations. They will be selected on the ability to Import Fuel and operate without Forex requirements from the CBSL and Banks for the first few months of operations.” The state-run Ceylon Petroleum Corporation (CPC) controls about 80pc of the fuel market and Lanka IOC, a unit of Indian Oil Corporation, the rest. Sri Lanka needs about 1.2m litres of so-called A1 jet fuel a day to supply airlines but the CPC has been unable to meet the requirement as the government has stated. The cabinet also allowed bunkering companies registered with the government to import jet fuel so that there must be no disruption of flights, the government said in a statement.
Wijesekera flew to Qatar late on Monday night and is very hopeful to find a long-term fuel supplier in Qatar willing to work with economic challenges that the country is facing with low foreign reserves. President Gotabaya Rajapaksa said on Twitter, “Had a productive meeting with the Russian Ambassador Yuri Materiy yesterday. Maintaining robust bilateral relations between our two countries, whilst focusing on developing trading opportunities was discussed extensively at this meeting.”
There was light traffic on Tuesday with schools being shut down and mostly people working from home but buses and trains were running and grocery shops were open. Sri Lanka is confronting the chance of running out of staples, particularly rice, somewhat because of very low production in view of a now-reversed restriction on chemical fertiliser last year. The government also said Sri Lanka would farm 250,000 hectares (617,763 acres) of unused land belonging to religious institutions including temples, churches and mosques to support with food deficiency in the long run.
Prime Minister Ranil Wickremesinghe told parliament this month that Sri Lanka needed about $5bn to pay for imports including fuel, fertiliser and food. The government is in talks with the International Monetary Fund to find a solution but many people can hardly hang tight and the demand for passports has increased as people look to opportunities abroad. The Naval officers have detailed 47 people so far illegally migrating to Australia and 102 people in total who had been trying to escape through a boat.