ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board is running low on furnace oil amid dry weather with the state-run Ceylon Petroleum Corporation asking the agency to open its own letter of credit, sector sources said as foreign exchange shortages continue.
The CEB had 5,700 Metric Tonnes of furnace oil and the West Coast Power Company (Yugadanavi) had 15,500 Metric Tonnes.
As of December 20, the CPC had 16,000 metric tonnes of furnace oil and about 500 metric tonnes were produced daily after the refinery was re-started.
With the refinery expected to run up to 25 days, another 12,000 MT would be produced.
This will allow the CEB to produce energy up to mid-January, according to internal calculations.
The CEB had ordered 30,000MT of fuel. As of December 20, the CPC had asked CEB to open a letter of credit and the shipment was not confirmed.
CEB available thermal plants are now fully utilized. If CEB fuel oil plants are halted due to lack of fuel, the utility will have to get power from the West Coast plant violating the merit order.
In that case fuel may be available up to January 24.
Sri Lanka is facing forex shortages due to money printed to maintain low interest rates.
Sri Lanka was earlier printing money to finance the deficit after crippling bond auctions with price controls. Bond markets are now working and money is printed to fill liquidity shortages coming from central bank dollar sales (sterilized interventions).