Sri Lanka To Pay $72.6 Mn For 90,000 Tonne Russian Oil, Restart Sole Refinery Shut Since March: Energy Minister

Sri Lanka Energy Minister Wijesekera estimates that Sri Lanka will need $568 million to pay for a dozen fuel shipments needed in June.

A Sri Lankan tuk-tuk driver pushes his tuk-tuk while waiting in line at a fuel station in Colombo, Sri Lanka. ( Image Source :Getty Images )

New Delhi: In its attempt to restart only refinery to address the ongoing energy crisis, Sri Lanka will pay $72.6 million for a 90,000-tonne shipment of Russian oil docked at Colombo’s port for weeks, said energy minister Kanchana Wijesekera on Saturday, reported news agency Reuters. The island nation has been struggling to pay for fuel, food, and medicine imports due to a shortage of foreign currency. Facing a severe economic crisis in decades, Sri Lanka has defaulted on some external debt as well.

Just like the rest of Asia, Sri Lanka is aiming to move to long-term crude tenders with an aim to hedge against high crude spot prices. However, dwindling foreign exchange reserves have affected its plans, the power minister said on Saturday.

 “I have reached out to multiple countries, including Russia, for support to import crude and other petroleum products,” said power and energy minister Kanchana Wijesekera.

Sharing details about the 90,000-tonne consignment, the minister said the consignment was ordered through Dubai-based Coral Energy and the payment would kickstart the country’s sole refinery, which has been forced to shut down since March 25.

 “The next shipment will also be ordered from the same company. Another consignment will be needed within the next two weeks to keep the refinery running continuously,” Wijesekera said.

Fuel Crisis In Sri Lanka

The fuel shortage has triggered long queues of two-wheelers and cars outside fuel stations, sometimes miles long with high global oil prices exacerbating the misery of the common man.

Wijesekera estimates that Sri Lanka will need $568 million to pay for a dozen fuel shipments needed in June.

Amid the financial crisis, the island nation is struggling to pay $31 million for a furnace oil shipment docked at Colombo’s port. State-run Ceylon Petroleum Corporation (CPC) needs $735 million to clear letters of credit for previous oil purchases.

Total foreign reserves were $1.82 billion at the end of April.

There are protests simmering in with demonstrators demanding the resignation of President Gotabaya Rajapaksa over the current crisis.