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To Alleviate Shortages, Cash-Strapped Sri Lanka Will Eliminate Its Petroleum Duopoly


28/06/2022


To Alleviate Shortages, Cash-Strapped Sri Lanka Will Eliminate Its Petroleum Duopoly
Sri Lanka will enable oil-producing countries' corporations to import and sell petroleum, the power and energy minister said on Tuesday, breaking a duopoly as the country works to address a petrol and diesel shortfall that is deepening an economic crisis.
 
The Cabinet decision occurred as Kanchana Wijesekera, the minister, was on his way to Qatar, and a ministerial colleague was scheduled to arrive in Russia on Sunday for negotiations on energy accords.
 
According to the Central Bank, Sri Lanka is experiencing its worst economic crisis since independence, with foreign exchange reserves at a record low of $1.92 billion, however analysts estimate a lower amount of usable cash.
 
The island of 22 million people is straining to pay for crucial imports including as food, medication, and, most importantly, water.
 
From Tuesday, the government halted urban schools for around two weeks and restricted gasoline supplies to services deemed vital, such as health, railways, and buses, because stockpiles would only last a week or so depending on regular demand.
 
"Cabinet approval was granted to open up the fuel import and retail sales market to companies from oil-producing nations," Wijesekera said on Twitter.
 
"They will be selected on the ability to import fuel and operate without forex requirements from the CBSL (central bank) and banks for the first few months of operations."
 
The state-owned Ceylon Petroleum Corporation (CPC) controls over 80% of the petroleum market, with the remainder controlled by Lanka IOC, a subsidiary of Indian Oil Corporation.
 
The Cabinet also authorised registered bunkering companies to import jet fuel so that flights are not disrupted, according to a government statement.
 
Sri Lanka requires approximately 1.2 million litres of so-called A1 jet fuel each day to feed planes, but the CPC has been unable to match the demand, according to the government.
 
Wijesekera arrived in Qatar late Monday night, while Education Minister Susil Premajayanth is scheduled to arrive on July 3.
 
According to a ministry source who declined to be identified because he is not authorised to speak to the media, Wijesekera aims to locate a long-term gasoline supplier in Qatar who is "prepared to deal with Sri Lanka's foreign exchange and other issues."
 
On Monday, President Gotabaya Rajapaksa tweeted that he met with Russian Ambassador Yuri Materiy. Sri Lanka purchased 90,000 tonnes of Russian oil last month.
 
"Maintaining robust bilateral relations between our two countries, whilst focusing on developing trading opportunities was discussed extensively at this meeting," Rajapaksa said.
 
On Tuesday, traffic was sparse on the streets of Colombo's main city, with schools closed and most public and private sector employees working from home.
 
However, buses and trains were operating, and stores selling groceries and other necessities were open.
 
Sri Lanka will also plant 250,000 hectares of underused land owned by religious organisations such as temples, churches, and mosques to help avert a food shortfall in the coming months, according to the government.
 
Sri Lanka may run out of commodities, particularly rice, due to a drop in production caused by a now-reversed ban on artificial fertiliser last year.
 
This month, Prime Minister Ranil Wickremesinghe told parliament that Sri Lanka required $5 billion to cover imports such as petroleum, fertiliser, and food.
 
The government is negotiating a bailout with the International Monetary Fund, but many people are impatient, and demand for passports has increased as people seek possibilities abroad.
 
The navy said it apprehended 47 people, including seven children, off Australia's west coast late Monday as they attempted to enter the country illegally.
 
Over the last two weeks, more than 120 people have been apprehended while attempting to flee the nation in small boats.
 
(Source:www.reuters.com)