Cash-strapped Sri Lanka gets Russian oil to ease shortages | News

Cash-strapped Sri Lanka gets Russian oil to ease shortages |  News

The 90,000-tonne consignment of Russian oil waited offshore for more than a month as Sri Lanka was unable to pay for shipment.

Sri Lanka has taken delivery of a consignment of Russian oil to restart operations at the country’s only refinery, the energy minister said.

The delivery of Russian crude oil – which could soon be subject to a European embargo – had been waiting offshore for over a month as Sri Lanka was unable to raise the millions to pay for it, Power and Energy Minister Kanchana Wijesekera told reporters on Saturday.

Sri Lanka will pay $72.6m to buy the 90,000-tonne shipment of Russian oil, the minister said.

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

The 90,000-tonne consignment was ordered through Dubai-based Coral Energy, the minister said, adding that the shipment would facilitate restarting the country’s sole refinery, which has been closed 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,” he added.

Colombo is in talks with Moscow to arrange direct supplies of crude, coal, diesel and petroleum despite US-led sanctions on Russian banks and a global diplomatic outcry over Russia’s invasion of Ukraine.

“I have made an official request to the Russian ambassador for direct supplies of Russian oil,” Wijesekera told reporters.

“Crude alone will not fulfill our requirement, we need other refined [petroleum] products as well.”

Sri Lanka is suffering its worst economic crisis since independence, with shortages of fuel and other essentials making life extremely difficult for the island nation’s 22 million people.

The country’s efforts to secure fuel supplies came as European Union leaders were in talks to negotiate a fresh round of sanctions against Russia over the Ukraine conflict, including an oil embargo. Russian oil is already subject to a US embargo.

Sri Lanka’s state-run Ceylon Petroleum Corporation (CPC) refinery was shuttered in March following a foreign exchange crunch, which left the government in Colombo unable to finance imports, including crude.

The Sapugaskanda refinery on the outskirts of the capital Colombo will resume work in about two days to produce about 1,000 tonnes of diesel daily to meet the country’s acute fuel shortage.

‘Inflation is crushing the poorest’

Sri Lanka’s economic crisis has seen long queues of motorists outside petrol stations, waiting hours and sometimes even days for scant supplies of petrol and cooking gas.

Locals are also grappling with a serious lack of imported food and pharmaceuticals, along with record inflation and lengthy daily blackouts.

The IMF said on Thursday that it was committed to helping Sri Lanka, but any aid program will be contingent on ensuring the nation’s unsustainable debt can be managed.

Sri Lanka has defaulted on its $51bn foreign debt and on Tuesday appointed international consultants to help restructure its international sovereign bonds and bilateral loans.

The government also effectively ended subsidies on fuel by raising prices to a record high on Tuesday. Diesel prices have increased 230 percent and petrol has gone up 137 percent in the past six months.

The country’s overall inflation last month was a staggering 33.8 percent year on year, with food inflation at an even higher 45.1 percent, Sri Lanka’s census office reported on Monday.

An economist at Johns Hopkins University, Steve Hanke, who tracks prices in the world’s trouble spots, said Sri Lanka’s inflation was even higher than officially reported.

“Using high-frequency data and the purchasing power parity technique, I accurately measure inflation at 122 percent year on year,” Hanke said, referring to March inflation, which was officially 21.5 percent.

“Inflation is crushing the poorest in Sri Lanka,” he said.

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