ECONOMYNEXT – Sri Lanka has enough fuel stocks and the public should fear shortages, Co-Cabinet spokesman Ramesh Pathirana said as the country’s Petroleum Minister was reportedly seeking credit lines to buy oil.
“We can tell you that there is no scarcity of oil in this country,” Pathirana told reporters. “Do not get unnecessary fears.”
His comments came amid reports that Sri Lanka was seeking to borrow 2.5 billion US dollars from some unsolicited proposal made by US and Europe based funds to repay loans of state-run petroleum utility Ceylon Petroleum Corporation.
But the cabinet spokesman said the country has “adequate stocks” and would finance oil purchases in the future.
“The government is ready to finance oil imports in the future,” he said.
Sporadic speculation over fuel availability came after Energy Minister Udaya Gammanpila asked the public to use fuel sparingly amid foreign exchange shortages.
Last month a trade union leader linked to the opposition was taken to custody by police for questioning over a statement that there is oil stock only for three weeks.
In July there were media reports that an oil tanker was kept waiting to discharge its cargo over a payment delay.
Meanwhile Minister Pathirana said the discussions between Minister Udaya Gammanpila and oil supplying countries are to discuss the price and long term credit lines.
“There is no final decision on this,” he said. “But I want to clearly say there is no oil scarcity.”
Sri Lanka raised oil prices earlier this year backtracking on an election promise to ‘fix’ oil prices through an energy price stabilization fund.
Government statements have said the banking system was threatened by over 652 billion rupees (about $3 billon US dollars) loaned rupees to the CPC, and prices had to be raised to stop further borrowings.
The public had questioned why the CPC is in debt when customers paid hard cash for oil.
Analysts had shown that whenever Sri Lanka’s central bank printed money to created foreign exchange shortages the CPC had been made to borrow dollars to avoid buying dollars in the market with the rupees, running up massive debts.
In 2018 the CPC ran an 80 billion rupee loss on its forex liabilities. Oil bills generally get the attention of policy makers (whenever money is printed) because they are large.
However in years when money is not printed and the central bank runs deflationary policy, the CPC not only pays oil bills effortlessly with its rupee revenues, but also repays part of its credit lines. (Colombo/Sept14/2021)