Sri Lanka lacks foreign exchange to cover the cost of fuel imports, energy minister Udaya Gammanpila said Monday, adding that the country seeks to arrange payment for a shipment of 40,000 tons of diesel.
Gammanpila said that his ministry has discussed with the Finance Ministry and the Central Bank of Sri Lanka (CBSL) to provide $35 million in funds to cover the cost of the fuel shipment that arrived in the Colombo port on Sunday.
“Even with this fuel, we will only have diesel for six days,” he said, indicating that the country could be heading for “a serious fuel shortage.”
The state-owned Ceylon Petroleum Corporation (CPC) has started rationing distribution in preparation for a fuel shortage crisis, issuing just about half of what is regularly distributed to pumping stations, the minister added.
Secretary of the Energy Ministry K.D.R. Olga said that CPC amassed liabilities of $3.7 billion last year, primarily through the use of letters of credit with state banks to finance fuel imports.
She also noted that the government has yet to approve the ministry’s request to raise the fuel price, which aims to offset some of the losses.
Sri Lanka’s foreign exchange reserves plummeted to $2.6 billion last month, with total outstanding sovereign bonds amounting to $12.55 billion, including $1 billion of the bonds maturing in July.
However, the CBSL maintained that the country is not on the verge of sovereign default and reaffirmed the government’s commitment to “honor all forthcoming debt obligations.”
“The government and the CBSL have already taken necessary measures to secure alternative forex inflows via a number of bilateral and multilateral funding arrangements to meet the upcoming debt obligations,” it said in a statement.
India lent $2.4 billion in financial assistance to Sri Lanka last week to help the country overcome its financial constraints, and delivered 40,000 metric tons of fuel.
“India [is] a committed partner and a true friend of Sri Lanka. The High Commissioner handed over 40,000 [metric tons] fuel consignment by Indian Oil Company,” the Indian high commissioner said in a Twitter post.
