Sri Lanka struggling to secure fresh fuel supplies, minister says

The island is wilting under its worst financial crisis in seven decades with foreign exchange reserves at record lows leaving it scrambling to pay for essential imports including fuel, food and medicine.

“We are struggling to find suppliers. They are reluctant to accept letters of credit from our banks. There are over $700 million in overdue payments so now suppliers want advance payments,” Power and Energy Minister Kanchana Wijesekera told reporters.

In the past two months Sri Lanka largely recieved fuel via a $500 million Indian credit line, which ran out in mid-June. A petrol shipment due last Thursday failed to arrive and no fresh shipments are yet scheduled, Wijesekera said.

“We have about 9,000 metric tons of diesel and 6,000 metric tons of petrol left. We are doing everything we can to get new stocks but we don’t know when that will be.”

However, Sri Lanka also implemented a 12%-22% fuel price increase in the early hours of Sunday. A price hike in May pushed inflation to 45.3%, the highest since 2015.

People, already waiting in miles-long, snaking queues outside pumps, are unlikely to get fuel as the government will focus on issuing the remaining stocks for public transport, power generation and medical services, Wijesekera said.

The military, which has already been deployed at fuel stations to quell unrest, will now issue tokens to those waiting, sometimes for days, he said, adding that ports and airports will be given fuel rations.

Separately, the government on Sunday asked about one million public employees to work from home until further notice.

A delegation from the US Treasury and State Departments arrived in Colombo for a three-day visit on Sunday to assess the situation. An team from the International Monetary Fund is already in Sri Lanka for talks on a possible $3 billion bailout package.

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