Sri Lanka sends 2 ministers to Russia for oil amid crisis

AFP , AP , Monday 27 Jun 2022

Sri Lanka is sending two government ministers to Russia to negotiate for fuel, one of the necessities nearly exhausted amid the Indian Ocean island nation's economic collapse.

Sri Lanka
People wait to buy fuel at a fuel station in Colombo, Sri Lanka, Monday, June 27, 2022. Sri Lanka is sending two ministers to Russia to negotiate for fuel. AP


The development comes as Washington and its allies aim to cut off energy imports from Russia in line with sanctions over its war on Ukraine. Since the invasion in late February, global oil prices have skyrocketed, sparking a number of countries to seek out Russian crude, which is being offered at a steep discount.

Power and Energy Minister Kanchana Wijesekera said two ministers are scheduled to leave for Russia on Monday to continue talks that Sri Lanka has been having with Russian authorities to directly purchase fuel, among other related issues.

Wijesekera himself travelled to Qatar to negotiate concessionary terms for hydrocarbon imports.

Meanwhile, a delegation from the US Treasury and the State Department opened talks with Prime Minister Ranil Wickremesinghe, his office said.

"The United States has agreed to provide technical assistance for fiscal management in Sri Lanka," the premier's office said in a brief statement.

He urged people Saturday not to line up for fuel, saying only limited stock will be distributed to limited stations throughout next week. He said until the next shipments arrive, ``public transport, power generators and industries will be given a priority.''

Residents have had to queue for hours and sometimes days to get fuel, sometimes resorting to burning charcoal or palm fronds for cooking.

Like some other South Asian nations, Sri Lanka has remained neutral on the war in Europe.

However, Wijesekera said the foreign ministry and the Sri Lankan ambassador in Russia have been making arrangements for a fuel sale.

``There is an advantage for us if we could buy oil directly from the Russian government or the Russian firms. There are talks going on,'' he told reporters Sunday.

The shortages have led to protests against the government, recently to demand fuel. The government has deployed armed troops in addition to police at every fuel station.

Sri Lanka says it's unable to repay $7 billion in foreign debt due this year, pending the outcome of negotiations with the International Monetary Fund on a rescue package. It must pay $5 billion on average annually until 2026. Authorities have asked the IMF to lead a conference to unite Sri Lanka's lenders.

Last month, the country bought a 90,000-metric-ton (99,000-ton) shipment of Russian crude to restart its only refinery, Wijesekera said.

In an interview with The Associated Press in mid-June, Prime Minister Ranil Wickremesinghe said Sri Lanka would be compelled to buy oil from Russia and was trying to get oil and coal from traditional suppliers in the Middle East.

``If we can get from any other sources, we will get from there. Otherwise (we) may have to go to Russia again,'' he said.

Wickremesinghe also said last week that the state-run Ceylon Petroleum Corporation was $700 million in debt and as a result, no country or organization was willing to provide fuel.

Meanwhile, within this context, the Ceylon Electricity Board (CEB), having lost 65 billion rupees ($185 million) in the first quarter, has sought an 835 percent price hike for the heavily-subsided smallest power consumers, the Public Utilities Commission of Sri Lanka (PUCSL) said.

Currently, anyone using less than 30 kilowatts a month pays a flat 54.27 rupees ($0.15), which the CEB sought to raise to 507.65 rupees ($1.44).

"A majority of the domestic consumers will not be able to afford this type of steep increase," PUCSL chairman Janaka Ratnayake told reporters in Colombo.

"Hence we proposed a direct subsidy from the Treasury to keep the increase to less than half of what they have asked."

Domestic rates have yet to be decided, but prices will go up by 43 to 61 percent for commercial and industrial users, he added.

The CEB will also be allowed to charge users who earn foreign exchange, such as exporters, in dollars, he added, to help the generator finance imports of oil and spare parts.

The government imposed 13-hour power cuts a few months ago, but blackouts have been reduced to about four hours a day as rains filled hydropower reservoirs.

Over the past six months the government has already increased diesel prices nearly fourfold and petrol by more than two and a half times.

Sri Lanka remains virtually without both diesel and petrol. The energy minister has said he is unable to say when fresh stocks will arrive in the country, which does not have its own oil.

Unable to repay its $51 billion foreign debt, the government declared it was defaulting in April and is negotiating with the International Monetary Fund for a possible bailout.

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