Sri Lanka’s forex crisis to prolong fuel shortage at least for 12 months – minister
ECONOMYNEXT – Sri Lanka’s fuel import will have to be limited for the next 12 months due to dollar shortage and a systematic fuel rationing system with a QR-code is being rolled out nationwide, the Power and Energy Minister Kanchana Wijesekera said.
The QR system that is to be implemented island-wide on Tuesday 26 as a measure to supply fuel as the government cannot fulfill the daily demand, the minister said in his twitter feed.
“Due to Forex issues, fuel imports have to be restricted in the next 12 months,” Wijesekera said on Monday (25).
Sri Lanka’s average fuel import bill is around 500-550 million US dollars per month at present while the country has only a few millions of usable reserves as of end-June. The island nation has been managing the fuel from its export earnings and remittances which are much lower than total import bill.
Sri Lanka’s foreign exchange reserves depleted to near zero after the government under Gotabaya Rajapaksa did not seriously addressed a looming economic crisis. That led to shortage of many essentials including fuel, resulting in public anger and protests which eventually forced Rajapaksa to flee the country.
An Indian 500 million US dollar credit line held the country to manage the fuel import form mid March to June 16.
The Ceylon Petroleum Corporation (CPC) is forced to reduce its fuel purchase because it does not have dollars to import the country’s demand, while the only other player, listed Lanka IOC’s supply is also not enough to meet the demand amid hoarding and a booming black market for fuel.
“CPC has never distributed fuel daily to every single fuel station. Practically not possible even when stocks are unlimited,” the minister said.
The QR code-based National Fuel Pass will be used without the last digit number plate restrictions from August 1st, he said.
“From the 1st of August only the QR system quota will be in place & the last digit of the number plate system & other allocations will be invalid,” Wijesekera said.
He says by the end of the week different entities of government sector, divisional secretaries, police departments, and businesses will be given options to register their vehicles too. (Colombo/July 25/2022)
