Cash-strapped Sri Lanka announces weekly fuel quotas

People wait in a line to buy kerosene oil for their cookers due to domestic gas shortage, in Colombo, Sri Lanka, on May 24, 2022. PHOTO: REUTERS

COLOMBO (AFP, REUTERS) - Crisis-hit Sri Lanka announced weekly fuel quotas for motorists on Sunday (June 12), as an acute shortage worsened and longer queues formed outside the few pumping stations still operating.

Energy minister Kanchana Wijesekera said the state-run Ceylon Petroleum Corporation was struggling to finance oil imports, while consumption had shot up due to shortages of electricity and liquefied petroleum gas.

“We have no choice but to register consumers at filling stations and give them a guaranteed weekly quota until we are able to strengthen the financial situation,” the minister said. “I hope to have this system in place by the first week of July.”

He did not say how much fuel motorists will be allowed to buy under the new system.

Sri Lanka has been struggling with its worst economic crisis in decades, with the country unable to import basic necessities such as food, fuel and medication due to a lack of foreign exchange reserves.

In mid-April, the government ordered all fuel stations not to pump more than four litres of petrol for a motorcycle, five for a three-wheeler and 19.5 litres of gasoline or diesel for cars and SUVs.

Under that system, many motorists would top up, drain fuel into cans to build a buffer stock, and then return to the queue for more.

Queues at fuel stations have become longer, with hundreds of cars and thousands of motorcycles waiting in line, sometimes for days.

Two weeks ago, Sri Lanka received a shipment of Russian crude oil to be refined on the island, but the finished product from the Sapugaskanda refinery was less than a tenth of the country’s daily requirement. Around 90,000 tonnes of Siberian light crude was sent to Sri Lanka’s lone refinery after the shipment was acquired on credit from Dubai-based intermediary Coral Energy last month.

Sri Lanka may be compelled to buy more oil from Russia, its Prime Minister told the Associated Press.

Prime Minister Ranil Wickremesinghe, in an interview with the news agency on Saturday, said he would first look to other sources, but would be open to buying more crude from Moscow.

While Washington and its allies are trying to cut financial flows supporting Moscow's war effort, Russia is offering its crude at a steep discount, making it extremely enticing to a number of countries.

Mr Wickremesinghe, who is also Sri Lanka's Finance Minister, also indicated he would be willing to accept more financial help from China.

Sri Lanka's current predicament was of "its own making", he said, and the war in Ukraine was making it even worse adding that dire food shortages could continue until 2024.

He said Russia had also offered wheat to Sri Lanka, the AP reported.

Sri Lanka was also trying to get oil and coal from its traditional suppliers in the Middle East.

Officials are negotiating with private suppliers, but Mr Wickremesinghe said one issue they face is that "there is a lot of oil going around which can be sourced back informally to Iran or to Russia".

Since Russia's invasion of Ukraine in late February, global oil prices have skyrocketed.

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