Sri Lanka hikes fuel prices, enlists foreign firms to ease shortage

COLOMBO • Sri Lanka hiked fuel prices yesterday, creating further pain for ordinary people as officials from the United States arrived for talks aimed at alleviating the island's dire economic crisis.

Ceylon Petroleum Corporation (CPC) said it raised the price of diesel, used widely in public transport, by 15 per cent to 460 rupees (S$1.78) a litre, and petrol by 22 per cent to 550 rupees.

The announcement came a day after Energy Minister Kanchana Wijesekera said there would be an indefinite delay in getting new shipments of oil. He said oil due last week had not turned up while shipments scheduled to arrive this week would also not reach Sri Lanka due to "banking" reasons.

Mr Wijesekera apologised to motorists and urged them not to join long queues at pumping stations. Many have left their vehicles in queues hoping to top up when supplies are restored.

Official sources said the island's remaining fuel supply was sufficient for about two days, but that the authorities were saving it for essential services.

A delegation from the US Treasury and the State Department arrived for talks to "explore the most effective ways for the US to support Sri Lankans in need", the US embassy in Colombo said.

"As Sri Lankans endure some of the greatest economic challenges in their history, our efforts to support economic growth and strengthen democratic institutions have never been more critical," US ambassador Julie Chung said in a statement.

The embassy said it had committed US$158.75 million (S$220 million) in new financing in the past two weeks to help Sri Lankans.

The United Nations has already issued an emergency appeal to raise US$47 million to feed the most vulnerable segments of the island's 22 million people. About 1.7 million residents need "life-saving assistance", according to the UN, with four out of five people reducing their food intake due to severe shortages and galloping prices.

The government has closed non-essential state institutions and schools for two weeks to reduce commuting because of the energy crisis. Several hospitals reported a plunge in the attendance of medical staff due to the fuel shortage.

Sri Lanka plans to allow foreign companies to distribute fuel in a bid to ease the crippling shortages.

The government is preparing a Cabinet paper that would allow for more fuel distributors, and is aiming for four new players - with foreign companies permitted - to operate CPC's stations, said Mr Wijesekera.

Currently, only CPC and Indian Oil Corp's Sri Lanka unit are permitted to distribute fuel. The new distributors will be asked to import oil on credit, Mr Wijesekera said.

AGENCE FRANCE-PRESSE, BLOOMBERG