The Central Bank of Sri Lanka (CBSL) and the Treasury have informed the Ministry of Power and Energy that the State can only afford to make a $ 50 million payment for energy imports per week, Minister Kanchana Wijesekera revealed yesterday (15).
Wijesekera made this observation while explaining the challenges faced by the Government in importing fuel, in response to a question from media on whether the fuel quota would be increased.
“Due to the shortage of dollars in our banking system, the Central Bank has informed us that the State can only afford to issue a maximum of $ 50 million per week for the import of energy products. This now applies to coal imports as well, as we no longer have the credit line for coal. We will also have to allocate funds for coal from this $ 50 million. This is the difficult situation we are in,” Wijesekera told the media last afternoon (15).
He explained that an ordinary shipment of 35,000 MT of petrol or diesel would cost between $ 40-50 million while a 100,000 MT consignment of crude oil cost between $ 75-85 million to order.
“When I took over in April, the banking system at the time did not allow us to open Letters of Credit (LCs) from our banks. This was due to Sri Lanka being downgraded and later declaring bankruptcy. The arrears are from the LCs that were opened earlier.”
According to Wijesekera, in April the Ceylon Petroleum Corporation (CPC) owed fuel suppliers $ 751 million in arrears. Approximately $ 350 million in arrears has now been settled, leaving an outstanding $ 400 million.
Earlier this year, CBSL Governor Dr. Nandalal Weerasinghe informed the Government that Sri Lanka could only afford to import a maximum of $ 200 million worth of fuel for the second half of 2022, causing the Government to ration fuel and effect a fuel price hike.
Petroleum suppliers have been reluctant to bid for term and spot tenders issued by the CPC due to colossal unpaid dues from the State, an increase in risk insurance premium, and Sri Lanka’s declaration of bankruptcy.
Minister Wijesekera also said that a decision would have to be taken by the Cabinet on whether to reconsider a fuel price revision or increase the quota.