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Fuel crisis: Uncertainty looms, helpless masses in queues

03 Jul 2022

  • No petrol till 22 July
  • Diesel shipments expected mid-July
  • Refinery shuttered due to lack of crude oil 
By Maheesha Mudugamuwa Uncertainty looms over when the next fuel stocks will arrive in the country, with the authorities still struggling to find prospective suppliers. With the limitations imposed last week on fuel distribution, the general public was forced to use the available public transportation while some sectors closed down operations. Industry and the service sectors have been majorly impacted by the lack of fuel. Last week, many suppliers who provide daily essentials to Colombo and its suburbs were hampered, resulting in most of the Fast-Moving Consumer Goods (FMCG) sections of supermarkets being left empty. The fuel shortage not only affects logistics but also phone app-based rideshare and delivery services, leaving many daily wage earners suddenly out of work. People under pressure “I went to buy vegetables and rice. Most shelves at the supermarket were emptied. They had no vegetables at all and I was told that the remaining rice stocks too were depleting. I could only buy five kilos because the limitation is still there,” Sapumal de Silva, a resident from Battaramulla, told The Sunday Morning. He went on to say that his vehicle had been parked at home with no fuel and they had also run out of gas around two months ago. His three children have been travelling to school on foot. “This is what the country has come to now. I was asked to work from home, but I missed two important meetings at my office last week due to power cuts. My wife and I are struggling to make ends meet,” he lamented. The situation in most urban areas around the country is deteriorating as many people are desperately looking for essentials for their survival. Speaking on behalf of consumers, consumer rights activist Ranjith Vithanage stressed that the Government had failed to provide the minimum facilities, which were essential for citizens to survive. “We can’t even buy goods, given the rates at which their prices are increasing daily. It’s the Government’s responsibility to provide citizens with basic requirements, but now we have to fight for even our daily meals,” he stressed. Vithanage said thousands of households in Colombo were suffering and those living on rent had been forced to leave the city as they could not afford food and accommodation with their salaries. “The future of an entire nation is uncertain. Many businesses are affected and financial situations are deteriorating day by day with the increasing prices. We don’t know what will happen if this continues,” he stressed. Petroleum woes Petroleum fuels play a vital role in industrial development, transportation, agriculture, and many other sectors. In Sri Lanka, the entire transport sector depends on imported fuel, while a considerable portion of the power sector too depends on furnace oil and diesel. On Wednesday (29), former Minister and Prime Minister’s Chief of Staff Sagala Ratnayaka told heads of media institutions that the Ceylon Petroleum Corporation (CPC) would not be able to source a petrol shipment until 22 July. Ratnayaka said that even if the CPC had funds, it would not be able to access a fuel shipment. According to him, Sri Lanka had (as of 29 June) 11,000 MT of diesel, 5,000 MT of petrol, 30,000 MT of furnace oil, and 800 MT of jet fuel. He said that 38,000 MT of diesel would be received between 11 and 15 July. When The Sunday Morning contacted Ministry of Power and Energy Secretary M.P.D.U.K. Mapa Pathirana, he said that there was no update on fuel shipments as yet and that the Government had decided to limit the supply. When asked about Minister Kanchana Wijesekera’s recent visit to Qatar, the Secretary said that the Minister had not updated him on the outcome of his visit. However, yesterday (2), LIOC Managing Director Manoj Gupta stated that they were awaiting three shipments of diesel and petrol  – one between 13-15 July, another between 29-31 July, and one between 10-15 August. On Monday (27 June) Cabinet approval was granted to open up the fuel import and retail sales market to companies from oil producing nations. Accordingly, companies will be selected on the ability to import fuel and operate without forex requirements from the Central Bank of Sri Lanka (CBSL) and other banks for the first few months of operation. The Ceylon Petroleum Corporation (CPC) will be the service provider for logistics, storage, and distribution, with a service fee charged from the companies. Selected CEYPETCO outlets and new outlets will be made available for LIOC and new companies selected. The refinery will operate with CPC. Meanwhile, Minister Wijesekera recently visited Qatar in search of financial assistance to overcome the current energy crisis, while Education Minister Susil Premajayantha and former Sri Lankan Ambassador to Russia Saman Weerasinghe and several officials are scheduled to leave for Moscow, Russia (3) today to hold talks to solve Sri Lanka’s energy crisis. Mannar oil wells With the Government on a desperate mission of looking for a prospective partner to supply fuel to Sri Lanka, Energy Trade Union (ETU) Convener Ananda Palitha said the only way out for the Government at present was the oil wells in Mannar, which are worth around $ 298 billion. According to him, the drilling of three wells in the Mannar Basin has already been completed and tender procedures have also been completed. “We can obtain a loan with one of the three wells at Mannar Basin kept as a guarantee. We will also be getting a royalty fee. This is the only solution we have at present. Instead of looking for loans from various countries by selling State assets, the Government can do this without expecting commissions, so a company willing to engage in drilling and oil exploration can arrive in the country and do so. Since we don’t have technical knowhow or the necessary funds, this is the only solution,” Palitha said. “We purchase oil without tenders. The company that supplies fuel decides on the flat rate, demurrage costs, everything. This is a very dangerous situation. The fuel shipment that we have already paid a portion of money for has not been delivered as expected. If we had signed agreements, they should be paying us demurrages. Since we don’t have agreements or tenders, the Government has not paid the whole payment. Initially, we had a 180-day credit period. It was reduced to 90 days and then to 60 days. Then they brought the shipment with the Letter of Credit near the port and waited till we honoured the payments. Now they come only if we pay in advance as they have reached a conclusion that the CPC and the local banks are not in a position even to pay for demurrages,” Palitha added. Sapugaskanda shuttered Meanwhile, the existing crude oil shortages have now forced the country’s only refinery, the Sapugaskanda Oil Refinery, to stop operations and wait for crude oil. CPC Deputy Refinery Manager (Manufacturing and Operations) K.G.H. Kodagoda said they were waiting for crude oil stocks to recommence operations. “Refining products is cheaper than importing them,” he added. When asked about the remaining stocks, he said the refinery had already distributed the refined products and the remaining oil would only be supplied to the Sapugaskanda Power Station.   Meanwhile, CPC officials close to the aviation fuel handling operation told The Sunday Morning that all available stocks of aviation fuel had already been supplied to the Civil Aviation Authority (CAA). The officials refused to reveal the details of the stocks.   


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