Sri Lanka Has Less Than One Day’s Worth of Fuel Stock: Energy Minister

People wait for fuel at a gas station in Colombo, Sri Lanka, on June 11, 2022. Eranga Jayawardena/AP Photo

Sri Lanka was left with less than a day’s worth of gasoline on July 4, disrupting the operations of private bus operators and national airlines.

The country now has just 12,774 tons of diesel and 4,061 tons of gasoline reserves, Energy Minister Kanchana Wijesekera told reporters on July 4.

The next petrol shipment is due between July 22–23, while two tankers with diesel shipments will arrive within the following two weeks, Wijesekera wrote on Twitter.

Wijesekera said the central bank could only release $125 million of the $587 million required for scheduled petroleum shipments. Sri Lanka must also pay $800 million to seven suppliers for previous fuel purchases.

However, he noted that local companies will still be able to purchase fuel on a daily or weekly basis if they can make a one-month advance payment in U.S. dollars.

Fuel Sales Limited

Sri Lanka’s government halted fuel sales for private vehicles on June 27, limiting fuel supply to just essential sectors such as public transportation, health, food, and export industries.

The Lanka Private Bus Owners Association said the fuel crisis has “completely disrupted” private bus services in Sri Lanka, with roughly 10,000 private buses unable to obtain fuel on July 5.

The unprecedented fuel crisis also disrupted SriLankan Airlines, which announced to employees in an internal memo on June 29 that it would cancel flights until July 18 because the airline had run out of jet fuel, the Daily Mirror reported.

University students take part in a demonstration demanding the resignation of Sri Lanka's Prime Minister Gotabaya Rajapaksa over the country's crippling economic crisis, near the parliament building in Colombo on May 6, 2022. Ishara S. Kodikara/AFP via Getty Images

The national carrier needed approximately 700,000 liters of fuel per day to operate from Bandaranaike International Airport, but the government was only able to get an average of 250,000 liters per day.

Unable to meet the required fuel consumption, the airline decided to implement “tech stops” on certain routes to reduce the uplift from Colombo, even though the method came at an additional cost.

“[The Government of Sri Lanka] is negotiating with private entities to import jet fuel in order to have a continuous supply in the future. As this will take more than two weeks from now, we will be compelled to operate a zero-fuel schedule in the coming days,” the airline said.

Sri Lanka’s economic crisis

Sri Lanka is on the verge of bankruptcy, with its foreign exchange reserves plummeting by 70 percent in the past two years. The government said that it was unable to pay $7 billion in foreign debt due in 2022, and has sought assistance from the International Monetary Fund.

As of April 2022, the top creditors for the debt are the Asia Development Bank for $4.4 billion, China for $3.39 billion, Japan for $3.36 billion, and the World Bank for $3.2 billion.

According to Colombo-based thinktank Verite Research, Beijing’s interest rates have set the Chinese loans apart from other lenders, with interest averaging 3.3 percent, reported Nikkei Asia. Japan’s rate stands at 0.7 percent.

The maturity period for Beijing’s loan at 18 years is also shorter than for Japan’s loan of 34 years.

Sri Lanka had requested that China amend the terms of a $1.5 billion yuan-denominated swap facility that it signed in 2021, which stipulates that the fund can only be used provided that Sri Lanka has enough foreign reserves to last three months.

Sri Lanka's new prime minister Ranil Wickremesinghe (C) visits a Buddhist temple after his swearing in ceremony in Colombo on May 12, 2022. Ishara S. Kodikara/AFP via Getty Images

Sri Lankan Prime Minister Ranil Wickremesinghe said the government will hold a credit aid conference with India, China, and Japan for loan packages to reach a “general consensus” on the lending processes as each country has its own system for granting loans.

“However, there have been some conflicts and disagreements between us in the recent past. We are working towards resolving these and fostering friendly relations once again,” the prime minister told parliament on June 22.

Thousands of Sri Lankans have taken to the streets to protest the government’s mishandling of the country’s economic crisis, leading to the resignation of then-Prime Minister Mahinda Rajapaksa on May 9.

The country’s unprecedented economic crisis has left millions of its people in need of life-saving aid, with the severe shortages of essential medicines and frequent power cuts jeopardizing the country’s health care system.