Sri Lanka halts fuel supply to non-essential services as crisis deepens

A closed Ceylon Petroleum Corporation gas station displays the availability of all types of fuel on a board due to a fuel shortage, amid the country’s economic crisis, in Colombo, Sri Lanka, June 27, 2022 .

Dinuka Liyanawatte | Reuters

Sri Lanka will close schools and only allow fuel supplies to services deemed essential like health, trains and buses for two weeks from Tuesday, a minister has said, in a desperate bid to deal with a serious shortage.

Sri Lanka is going through its worst economic crisis, with foreign exchange reserves at record highs and the island of 22 million people struggling to pay for essential imports of food, medicine and, most importantly, fuel.

Industries like clothing, which bring in big money in the Indian Ocean nation, only have fuel for about a week to 10 days. The country’s current stocks will run out in just under a week based on steady demand, according to Reuters calculations.

Sri Lanka will provide fuel only to trains and buses, medical services and vehicles carrying food from Tuesday until July 10, government cabinet spokesman Bandula Gunewardena told reporters.

Schools in urban areas will be closed and everyone is being asked to work from home, he said. Interprovincial bus service will be limited.

“Sri Lanka has never faced such a severe economic crisis in its history,” Gunewardena said.

Autorickshaw driver WD Shelton, 67, said he waited in line for four days for fuel.

“I didn’t sleep or eat properly during that time,” he said. “We can’t win, we can’t feed our families.”

A member of the Sri Lankan Air Force checks the tokens of people queuing for fuel due to a fuel shortage, amid the country’s economic crisis, in Colombo, Sri Lanka, on 27 June 2022.

Dinuka Liyanawatte | Reuters

people try to run away

The government is in talks with the International Monetary Fund (IMF) over a possible bailout, but many people cannot wait that long and demand for passports has increased.

In the early hours of Monday, the Navy arrested 54 people off the east coast as they attempted to leave by boat, a spokesperson said, in addition to 35 ‘boat people’ detained last week .

The embattled President’s older brother Gotabaya Rajapaksa resigned as prime minister last month after clashes between pro- and anti-government protesters escalated into violence across the country that left nine people dead and around 300 injured.

A worsening fuel shortage could lead to a new wave of protests.

Opposition leader Sajith Premadasa called on the government to step down.

“The country has completely collapsed due to fuel shortages,” he said in a video statement. “The government has repeatedly lied to the people and has no plan on how to move forward.”

power outages

The government’s fuel stock stands at around 9,000 tonnes of diesel and 6,000 tonnes of petrol, the energy minister said on Sunday, but no new deliveries are expected.

Lanka IOC, the local unit of Indian Oil Corporation, told Reuters it had 22,000 tonnes of diesel and 7,500 tonnes of gasoline, and expected another shipment of 30,000 tonnes of gasoline and diesel combined around July 13.

Sri Lanka consumes around 5,000 tonnes of diesel and 3,000 tonnes of petrol a day just to meet its transport needs, Lanka IOC chief Manoj Gupta told Reuters.

People line up after being given tokens to buy gasoline due to a fuel shortage, amid the country’s economic crisis, in Colombo, Sri Lanka, June 27, 2022.

Dinuka Liyanawatte | Reuters

Other big consumers are industries like apparel and textile companies, whose exports jumped 30% to $482.7 million in May, data showed Monday.

“We have enough fuel for the next seven to ten days, so we are managing,” said Yohan Lawrence, secretary general of the Sri Lanka Joint Apparel Associations Forum.

“We are watching and waiting to see if fresh fuel stocks are coming in and what will happen in the next few days.”

Sri Lanka’s electricity regulator said the country was using its last stocks of fuel oil to run several thermal power stations and keep power outages to a minimum. The scheduled power cuts will increase to three hours from Monday against two and a half hours earlier.

“We hope to maintain power cuts at three or four hours for the next two months,” said Janaka Ratnayake, chairman of Sri Lanka’s Public Utilities Commission. “But given the situation in the country, that could change.”

An IMF team is visiting Sri Lanka for talks on a $3 billion bailout. The country hopes to reach a staff-level agreement before the end of the visit on Thursday, which is unlikely to release immediate funds.

It has received about $4 billion in financial aid from India, and the Sri Lankan government said on Monday that the United States had agreed to provide technical assistance for its budget management.

Michelle J. Kelley