COLOMBO/NEW DELHI: Sri Lanka is trying to arrange a payment of $35 million for a shipment of 40,000 tonnes of diesel with just a few days of stocks left, the energy minister said on Monday, warning of a looming fuel shortage as foreign exchange runs short.
Reserves in the Indian Ocean nation, which typically spends about $450 million each month on fuel imports, dwindled to $2.36 billion by the end of January.
The shipment reached the port of Colombo on Sunday, Energy Minister Udaya Gammanpila told Reuters, adding that his ministry was in talks with the finance ministry and the central bank to release the funds.
Sri Lanka out of cash to buy oil: minister
"Even with this fuel, we will only have diesel for six days," he said. "We are heading for a serious fuel shortage because we do not have adequate foreign exchange to pay for fuel imports."
State-run Ceylon Petroleum Corporation (CPC) has begun to ration distribution in an effort to prepare for the crisis, by issuing just about half of what is typically released to pumping stations, the minister added.
The minister did not elaborate on the details of the tanker, but a 42,000 tonne diesel cargo ship, the Bahri Tulip, is awaiting discharge at Colombo port, according to ship-tracking data on Refinitiv Eikon.
CPC is also seeking at least 710,000 barrels of 500 ppm gasoil for delivery in Colombo during March, according to separate tender documents seen by Reuters.
CPC has racked up liabilities of $3.7 billion, mostly by opening letters of credit with state banks to fund fuel imports for most of last year, said K.D.R. Olga, the secretary of the energy ministry.
The ministry has sought a price hike to cover some of the losses, she added. But the government has not yet said when it might approve one.
Indian Oil Corporation's subsidiary in Sri Lanka, Lanka IOC, said its operations in the island were also being impacted by forex issues.
"Finding adequate foreign exchange has become a nightmare," Lanka IOC Managing Director Manoj Gupta told Reuters.
The firm is likely to find $26 million for a petrol and diesel shipment due on Tuesday, but those due in March are more uncertain, he added.
The growing fuel crisis is also hitting power supply, with the power regulator warning of five to six hours of daily load shedding over the next few days unless fuel supplies to thermal power plants increase.
The regulator plans two hours of power cuts on Monday, up from one hour on Friday. On Monday the Public Utilities Commission of Sri Lanka ordered a two-hour power cut to ease demand during peak hours.
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