Sri Lanka out of cash to buy oil: Minister

COLOMBO (AFP) – Sri Lanka’s state-run petroleum company has run out of cash to buy oil, and fuel shortages across the country could get worse, the energy minister said Friday (Feb 18).

Mr Udaya Gammanpila said the loss-making Ceylon Petroleum Corporation (CPC) continued to haemorrhage cash and was out of money to procure supplies from abroad.

He said the CPC suffered losses of up to 42 per cent on the sale of diesel at government-mandated prices.

Diesel is the most commonly used fuel for public transport, and motorists outside the capital Colombo have reported fuel long queues at understocked pumps.

“Earlier, we were short of dollars to import oil. Now we don’t have the rupees to buy the dollars,” Mr Gammanpila told reporters Friday.

He said the CPC registered losses of 83 billion rupees ($550 million) last year alone.

“Even if taxes are lifted on oil sales, it is not enough to cover our losses,” he said. “A severe shortage is inevitable unless we increase prices or the treasury offers a bailout.”

There was no immediate comment from the finance ministry.

Sri Lanka’s worsening foreign-exchange shortage has seriously impacted the energy sector, which depends entirely on imports for its oil needs.

The shortage of furnace oil has already led to the shutting down of thermal electricity generators, resulting in unannounced power cuts across the Indian Ocean island.

Sri Lanka’s economy is also seeing a scarcity of food, with supermarkets forced to ration staple foods including rice. Automotive parts and cement are also in short supply.

The shortages pushed food inflation to a record 25 per cent last month.

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