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Fuel import: Changing procurement methods?

23 Oct 2022

  Sri Lanka may have to consider changing its fuel procurement process if the unavailability of funds to make payments persists, Ministry of Power and Energy Secretary M.P.D.U.K. Mapa Pathirana said yesterday (22). Responding to a question regarding outstanding payments for crude oil shipments and the consignments accumulating demurrage due to non-payment on arrival, Pathirana opined that seeking future crude oil purchases in a dollar-strapped environment was problematic. “Few people understand the efforts we take to keep fuel flowing at the pump. We have not completed payments for the two earlier (crude oil) shipments either. We have been unable to make payments for one shipment that is awaiting payment to unload. We realise that it accumulates demurrage too, but we are in a difficult position.” “I feel that we can’t sustain this procurement style without necessary funds being made available,” Pathirana opined, referring to the last crude oil shipments which Sri Lanka still owes payments for and the shipment of 99,000 MT of ESPO crude oil which has been awaiting payment for nearly a month. When asked why the Central Bank of Sri Lanka (CBSL) had failed to provide funds for the required payments, Pathirana said that the problem was not unique to the fuel sector but was felt by many. “Many think that the CBSL is bound to issue funds to us [the Ministry]; it is not. The CBSL at times issues funds for the reserves. The problem is that many banks do not want to open Letters of Credit (LCs) even if we have rupee funds. This is a major problem which many do not understand. If you try to open an LC today to import anything, you will see how hard it is,” he charged. Pathirana would not comment on whether the Ministry was considering a change in the procurement process. Sri Lanka has been struggling to fund fuel imports needed for mobility, industry, and power generation since November last year. Attempts to contact Minister of Power and Energy Kanchana Wijesekera on the issue failed.    Box Shipments due   According to the Ministry of Power and Energy, the 35,000 MT diesel shipment that was awaiting payments last week has been paid in full, with the vessel discharging its cargo by Thursday (20).  Another vessel, carrying 41,000 MT of diesel, began discharging its cargo last afternoon (22), a Ministry source said. Two fuel shipments are expected this week, with one octane 92 petrol shipment due to arrive on Wednesday (26) and another diesel shipment carrying 40,000 MT expected on Monday (24).  – By Asiri Fernando  


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