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Sri Lanka runs out of fuel as dollar crisis worsens; President says no more power cuts after March 5

(AFP/Reuters)-Sri Lanka’s public transport was crippled Wednesday as buses ran out of diesel, officials said as the country’s foreign exchange crisis worsened with no dollars to import fuel.

The Private Bus Owners’ Association said they were able to operate only about a quarter of their fleet of 20,000 vehicles, while drivers reported queuing for seven hours to top up fuel.

“I could not run the bus for two days because there was no diesel,” said 51-year-old bus driver Sarath.

“I have been in the diesel queue for seven-and-a-half hours.”

Many commuters were seen using their own motorcycles and small cars Wednesday after bus operators warned of drastically scaled back schedules.

One of Sri Lanka’s biggest fuel suppliers, Lanka IOC, put up prices by as much as 12 percent on Saturday while the state-owned Ceylon Petroleum Corporation (CPC) said it too asked the government to allow it to raise prices.

CPC sources said Wednesday they had supplies only for four more days.


“We have also reduced the issue of diesel to gas stations and asked pumps to try and ration supplies,” one said.

Taxi driver Thushara, 36, said he was in a queue for six hours to get petrol for his three-wheeler.

“Why can’t (President) Gotabaya (Rajapaksa) consider the suffering of the people?” Thushara told AFP as he reached the front of the line.

“Can’t he understand the suffering? Just come out and see. Why are you allowing people to suffer like this?”

Long blackouts –

The transport shutdown came as seven-and-a-half hour electricity blackouts also went into effect, the longest scheduled power rationing in over a quarter of a century.

The Public Utilities Commission (PUCSL) said the cuts were brought on due to the shortage of foreign exchange to import fuel for electricity generators.

Hydro electricity reservoirs were also running low due to the current dry season.

Under a new directive, all state institutions were also ordered Tuesday to switch off their air conditioners in the afternoon to save energy.

Sri Lanka’s tourism sector, a key foreign-exchange earner, collapsed in the wake of the Covid-19 pandemic, and the government imposed a broad import ban in March 2020 to save foreign currency.

The country is now in the grip of an economic crisis, with widespread shortages, including food, medicines, automotive parts and cement, and supermarkets forced to ration staple foods including rice, sugar and milk powder.

Official data showed the country’s foreign currency reserves at a low of $2.07 billion at the end of January, down 25 percent compared to the previous month and $7.5 billion in November 2019 when President Rajapaksa took over.

Energy minister Udaya Gammanpila has described the oil shortage as the “worst economic crisis since independence” from Britain in 1948.

The shortages pushed food inflation to 25 percent in January with overall inflation at 16.8 percent.

Sri Lanka president says no more power cuts after March 5

Mean while Sri Lanka will suffer no more power cuts after March 5, the president’s office said in a statement on Wednesday, following days of outages caused by a lack of funds to buy enough fuel to fire power plants.

The statement did not spell out how the South Asian country would secure fuel supplies to keep the power on from Saturday. Shortages have also led to long lines at petrol stations over the past month.

“There will be no power cuts from March 5. The distribution of fuel to all fuel stations across the country will be normalised from tomorrow,” the statement by President Gotabaya Rajapaksa’s office said.

Sri Lanka currently needs about $500 million a month to source diesel and gasoline, but resorted to power cuts last week as it scrambled to secure $31 million for a 3,700-million-tonne fuel shipment.

A spokesperson for the federal power ministry did not immediately respond to emails and calls on how the government planned to ensure supplies to fuel power plants.

Sri Lanka’s central bank has stopped releasing funds to pay for fuel shipments, two senior energy ministry sources said.

Nearly a third of Sri Lanka’s electricity is generated by oil-fired power plants and a similar amount comes from coal and hydro power, according to the state-run Ceylon Electricity Board (CEB).

Namal Hewage, general manager of state-run Lanka Coal Co Pvt Ltd, said the country had sufficient coal to ensure a continuous supply of electricity from the Ceylon Electricity Board-run coal-fired power plant.

Lanka Coal had issued a spot tender for 1.8 million tonnes in September, after which it received 30 shipments from South Africa and eight shipments from Russia, Hewage said.

The country has procured another 480,000 tonnes of South African-origin coal that are expected to arrive at the country’s ports over the coming days.

“This could be sufficient to last until September. The central bank has helped us with the letter of credit to pay for the coal supplies,” Hewage said.

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