Sri Lanka imposes power cuts amid fuel shortages as forex crisis deepens

Sri Lanka's worsening foreign-exchange shortage has seriously impacted the energy sector, which depends entirely on imports for its oil needs.

Published: 23rd February 2022 01:19 PM  |   Last Updated: 23rd February 2022 01:19 PM   |  A+A-

Sri Lankan minister Udaya Gammanpila

Sri Lankan minister Udaya Gammanpila (Photo| Facebook)


COLOMBO: Authorities in Sri Lanka are imposing power cuts on a staggered basis as the country continues to reel under the worst economic crisis in decades, which has led to fuel shortages and frequent power outages.

Sri Lanka's Public Utilities Commission said it will shut off the grid for four hours and 40 minutes on Wednesday due to a shortfall of 540 megawatts, state-owned power entity Ceylon Electricity Board (CEB) officials said.

President Gotabaya Rajapaksa had summoned a special meeting of the Cabinet on Tuesday to discuss the power crisis and fuel shortages. The depleted foreign exchange reserves have hindered imports of fuel and other essentials.

The Sri Lankan government on Monday admitted that it had run out of cash to buy fuel as pumps in most filling stations across the country have run dry. So dire is Sri Lanka's current economic situation that it does not even have adequate US dollars to pay for two shipments of fuel. "Two shipments of fuel have arrived today, but we are unable to pay for it," Sri Lanka's Energy Minister Udaya Gammanpila had said on Monday.

Last week, state-owned refinery Ceylon Petroleum Corporation (CPC) said it was out of money to procure supplies from abroad. The CPC suffered losses to the tune of USD 415 million in 2021 due to the sale of diesel at prices fixed by the government. "I had warned about the impending fuel shortages due to the dollar crisis twice in January and once earlier this month," Gammanpila said.

Sri Lanka's worsening foreign-exchange shortage has seriously impacted the energy sector, which depends entirely on imports for its oil needs. The fuel shortage has led to long queues at understocked pumps across the country.

Fuel shortages have stopped the functioning of at least three thermal power plants, CEB said. At the special cabinet meeting held on Tuesday, the Sri Lankan government decided not to raise fuel prices, Energy Minister Mahinda Amaraweera said.

In addition, the Ministry of Finance has agreed to repay the Rs 80 billion debt owed by the Ceylon Electricity Board to the Ceylon Petroleum Corporation for fuel, he added.

Earlier this month, Sri Lanka bought 40,000 metric tonnes of diesel and petrol from India's oil major Indian Oil Corporation to meet the urgent energy requirements in the economic crisis worsened by depleted foreign reserves.

"India a committed partner and a true friend of Sri Lanka. The High Commissioner (Gopal Baglay) handed over 40,000 MT fuel consignment by Indian Oil Company," a statement issued by the Indian High Commission here had said.

The delivery of the fuel by India came amidst the announcement of Sri Lankan Finance Minister Basil Rajapaksa's visit to India in a fortnight to formalise India's economic relief package for the country facing a serious forex crisis.

Last month, India announced a USD 900 million loan to Sri Lanka to build up its depleted foreign reserves and for food imports, amid a shortage of almost all essential commodities in the country. Earlier this month, an agreement to grant Sri Lanka a credit line of USD 500 million for fuel purchases was also sealed which was part of the immediate economic relief package.

Tourism, another key foreign-exchange earner, has also witnessed a lull due to the pandemic.


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