A crippling fuel shortage and consequent power cuts across Sri Lanka are threatening to worsen the island nation’s persisting economic crisis, while sparking protests from citizens.
Long queues of vehicle users lining up outside petrol sheds has become a frequent sight in capital Colombo and in several other parts of the country this week, as Sri Lanka is unable to pay for fuel imports. Already in the midst of a severe dollar crunch — with its foreign reserves drying up — Sri Lanka has been further hit by the oil price surge to $100 a barrel in the wake of Russia’s war in Ukraine.
“The problem facing the country is not a power generation or fuel shortage but the non-availability of dollars,” Energy Minister Udaya Gammanpila recently told parliament. Sri Lanka’s foreign reserves total just over $ 2 billion since the beginning of this year. The government must repay foreign debt of $7 billion this year, including a $1 billion repayment due in July. In its response to the pandemic, the Rajapaksa government imposed broad import restrictions to save dollars, resulting in frequent shortage of essentials such as milk powder, pulses, spices that were sourced from other countries.
President Gotabaya Rajapaksa on Thursday sacked Minister of Energy Udaya Gammanpila, who was in charge of fuel imports, and Minister of Industries Wimal Weerawansa. In recent weeks both openly criticised the government’s response to the dollar crisis.
Meeting fuel expenses
Sri Lanka roughly spends $500 million a month to source diesel and gasoline. Early in February, India and Sri Lanka signed an agreement for a $ 500 million from India to help the island nation with fuel imports. On February 15, Sri Lanka received a 40,000 MT fuel consignment from the Indian Oil Corporation. Late February, the government struggled to pay $ 35 million for another 40,000-tonne shipment of diesel.
Still scrambling for dollars to import adequate fuel, Sri Lanka on Tuesday announced seven-and-a-half-hour daily power cuts across the country, said to be the longest duration of power cuts in over 25 years. Apart from impairing activity in homes, the prolonged power cuts have put shops, malls, and restaurants under enormous pressure, especially when authorities are desperately trying to revive tourism.
The All Ceylon Container Carrier Owners’ Association (ACCCOA) told local daily TheMorning that nearly 20% of container carriers had to be taken out of service on Wednesday. Amid growing concern among business and services severely affected by the power disruption, President Gotabaya Rajapaksa’s office said in a statement that there would be no power cuts from March 5.
Several opposition legislators and activists have asked citizens to join them in protest against the government’s imposition of power cuts.
Meanwhile, Sri Lanka appears to be bracing for further shortages in the coming months. The Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI) has said it foresees a 20-25% shortage in medicines, due to price regulations, a delay in granting import licences, and persisting the dollar shortage. India has so far extended $1.4 billion assistance to help Sri Lanka cope with its unprecedented economic crisis. Colombo and New Delhi are negotiating a further $1 billion.
