Sri Lanka PM explains energy sector’s gloomy picture, possibility of 15-hr power cut
ECONOMYNEXT – Dollar shortage could force Sri Lanka to extend the power cuts to 15 hours while the petrol stocks for the whole country is available only for one day at the moment, the island nation’s newly appointed Prime Minister Ranil Wickremesinghe told in an address to the nation.
“A quarter of electricity is generated through oil. Therefore, there is a possibility that the daily power outages will increase to 15 hours a day,” he told in his 13-minute recorded television speech.
Sri Lanka has scheduled 3 hours and 40 minute daily power cut for Tuesday, May 17, much less from 13 hours it suffered in March.
The island nation’s dollar shortage has heavily hit the energy sector as it is solely depending on imports for fuel, gas, and coal.
“We must also immediately obtain 20 million US dollars to provide (cooking) gas to consumers. The situation of kerosene and furnace oil is even more urgent.”
“At present, the Central Bank, local state and private banks, and foreign banks functioning in Sri Lanka are all facing a dollar shortage,” he said. Before he became the prime minister, he had warned of a possible collapse in the country’s banking sector in the near future.
The dollar shortage came after Sri Lanka printed excess money amid record low interest rate and controlled exchange rate. a situation exploited by imports to bring down foreign goods and row materials to the country at a cheaper rate.
People have been on queues on a daily basis for fuel and cooking gas. India has come forward to help the 84.5 billion US dollar economy with 1.5 billion dollar credit line including for fuel.
“To ease the queues, we must obtain approximately 75 million US dollars within the next couple of days. At the moment, we only have petrol stocks for a single day. Due to the diesel shipment that arrived yesterday, the diesel lack of diesel will be resolved to some extent,” the Wickremesinghe, 73, said.
Under the Indian credit line, two more diesel shipments are due to arrive on the 18th May and 1st June. In addition, two petrol shipments are expected on 18th and 29th May.”
Sri Lanka has been unable to pay for fuel and gas shipments after the government was unable to pay the dues for the imports. The prime minister said three ships have been anchored within Sri Lanka waters for the last 40 days while admitting the country had a very lower amount of reserves.
He said the government was able to meet diesel demand for the next few days due to Indian credit line.
“We will also work towards making a payment for the gas shipment that arrived on Tuesday. Therefore, you will have some respite from the gas shortage,” he said, giving some hopes. (Colombo/May16/2022)
