• President seeking diplomatic relief for continued fuel supply
• No fuel shortage; adequate stocks in hand: CPSTL
• Govt. urges public not to panic buy; blames spike in purchase volume for disruptions
• Concerns about supply of furnace oil for power plants in 2022
• Continued supply of fuel a miracle: Gammanpila

  By Asiri Fernando The Government remains steadfast that it can ensure a continued supply of fuel, despite growing concerns that the foreign exchange crisis will lead to a shortage at the pump. This comes as two credit facilities, sought from Oman and India to sustain fuel and energy supply, progress at a snail’s pace. According to a senior Treasury source, both the $ 3.6 billion line of credit (LoC) sought from Oman, and the other $ 500 million LoC from India, are progressing slowly.  When contacted regarding the two LoCs, Central Bank of Sri Lanka (CBSL) Governor and former State Minister of Finance Ajith Nivard Cabraal told The Sunday Morning that parties involved “are in radio silence until the arrangements are finalised”. It is in this backdrop that Minister of Ports and Shipping Rohitha Abeygunawardena revealed that the President was using diplomatic channels to explore the possibility of obtaining a grace period for payments, and to continue the purchase of oil. Government officials last week urged the public not to engage in panic buying, pointing out that it may affect the planned distribution operations of the Ceylon Petroleum Corporation (CPC), which would worsen the crisis. However, like US dollars, faith in the Government’s assurances seem to be in short supply, as many motorists queued at the pump fearing a shortage. Public concerns about a possible fuel shortage came last week as consumers continued to struggle to find LP gas for cooking.  The LP gas shortage, despite a recent price hike, was also linked to the dollar shortage Sri Lanka is facing. A move by the State to temporarily shut down Sri Lanka’s only oil refinery at Sapugaskanda added to the fuel purchase frenzy. “If a large group of people rush in, fill their tanks and cans with fuel, then naturally there will be a temporary shortage,” Minister of Energy Udaya Gammanpila said last week, urging the public not to act on rumours. He called the ability to continuously provide fuel in a country which is facing a dollar scarcity, shortage of crude oil, and adequate storage facility, a miracle.  Commenting on the prevailing situation, Opposition MP Eran Wickramaratne told The Sunday Morning that closing the local refinery without having an alternative plan to increase oil and fuel storage capacity may lead to a shortage. “Also, the productivity of the refinery is low. The Government needs to improve its productivity or explore options of whether a partnership with the private sector can help improve it,” Wickramaratne said. Speaking to the press, Gammanpila explained that the decision to shut down the refinery for a 50-day period was aimed at saving US dollars. “The decision to stop the import of crude oil and shut down the refinery was taken with the aim of economising the dollar reserves. As the Energy Minister, I can’t bring in dollars. Instead of asking for dollars from the Treasury during these times, what we did was to help the Treasury save dollars,” Gammanpila stated. Gammanpila claimed that at present, the Government could save more dollars by importing petroleum products such as diesel and petrol rather than importing crude oil. The Energy Minister claimed that through the local refining process, the Government could save close to Rs. 15 per litre of fuel. However, the savings would then be in rupees and the need of the hour is to improve forex reserves, he pointed out. “By directly importing diesel or petrol, the price is around $ 93 a barrel. But when we need to import a barrel of crude oil, it costs $ 197,” Gammanpila said at a press conference. However, the Energy Minister’s views were contradicted by fellow government MP and former Minister of Petroleum Chandima Weerakkody, who claimed that refining crude oil to produce fuel locally will lead to savings for Sri Lanka. Weerakkody also argued that if Sri Lanka were to import kerosene, it may have to pay a price similar to when importing aviation fuel, which will likely affect many rural and fisheries communities. “Another issue is that our energy sector needs furnace oil for the thermal power plants. At the moment, we have adequate rain, and the hydropower reservoirs are full. However, the fact that we are not running the refinery and producing furnace oil will lead to a power crisis in the coming months, once the rains have stopped,” Weerakkody opined. However, Gammanpila claimed that due to heavy rains and reservoirs reaching capacity, the Ceylon Electricity Board (CEB) was not purchasing furnace oil to run thermal power plants at present. “We have 13,500 MT of furnace oil in our reserves that are unused. So, claiming that temporarily shutting down the refinery and stopping the import of crude oil will cause power outages is just another myth,” Gammanpila opined. Earlier this month, two tenders, to purchase coal for the thermal power plants, issued by the CEB did not see any bidders, calling into question if the coal-fired power plants could continue to generate power following the first quarter of 2022. Speaking in Parliament, State Minister of Education Reforms, Open Universities, and Distance Learning Promotion Susil Premajayantha also cautioned the Government on the effects of shutting down the refinery and on not producing kerosene locally. “500 tonnes of kerosene are needed for small industries, fisheries, and agriculture. We should not take this issue lightly. Power generation is key to the economy. It drives industry. Therefore, the Government must take concrete action to solve the energy crisis,” Premajayantha said. Responding to a query, Ceylon Petroleum Storage Terminals Ltd. (CPSTL) Chairperson Uvais Mohamed told The Sunday Morning that Sri Lanka was receiving scheduled diesel and petrol shipments with two (40,000 MT each) having arrived last week. According to Mohamed, Sri Lanka has a fuel storage capacity for 25 days of the national requirement (petrol and diesel) and with several shipments expected in the coming weeks, the CPSTL was confident they will reach full storage capacity. “What happens when there is panic buying is that the fuel stations run out of their normal volume and place larger orders for us to deliver. This causes disruptions to our planned delivery schedule and results in delays in distribution, which in turn causes delays at the pump,” the CPSTL Chair explained. Earlier in the week, Mohamed told the press that with the temporary closure of the CPC’s Sapugaskanda Refinery, distribution of fuel carried out from the facility (5-10%) had been absorbed by the CPSTL’s storage centres at Kolonnawa and Muthurajawela. “If any fuel station issues a request for fuel, we can supply fuel to any station across the island within 24 hours. That is our responsibility, and we will deliver,” Mohamed stressed. “I would kindly request the public not to make panic purchases. There were rumours that we (Sri Lanka) will run out of fuel several days ago. It didn’t happen. We are supplying what is required,” he added.