Cash-starved Sri Lanka to end fuel duopoly to ease fuel shortages
Sri Lanka will allow companies from oil-producing countries to import and sell fuel, the power and energy minister said on Tuesday.
Sri Lanka will allow companies from oil-producing countries to import and sell fuel, the power and energy minister said on Tuesday, ending a duopoly as it tries to overcome a shortage of petrol and diesel that is exacerbating an economic crisis.
The Cabinet decision came as the minister, Kanchana Wijesekera, headed to Qatar and a colleague was due to arrive in Russia on Sunday for talks on energy deals with officials there.
Sri Lanka is suffering its worst economic crisis since its independence, with foreign exchange reserves at a record low of $1.92 billion, according to the Central Bank, though analysts estimate a lower level of useable funds.
The island of 22 million people is struggling to pay for essential imports of food, medicine and, most critically, fuel.
The government closed urban schools for about two weeks from Tuesday and allowed fuel supplies only to services deemed essential like health, trains and buses as stocks would only last only a week or so based on regular demand.
"Cabinet approval was granted to open up the fuel import and retail sales market to companies from oil-producing nations," Wijesekera said on Twitter.
"They will be selected on the ability to import fuel and operate without forex requirements from the CBSL (central bank) and banks for the first few months of operations."
See Zee Business Live TV Streaming Below:
The state-run Ceylon Petroleum Corporation (CPC) controls about 80% of the fuel market and Lanka IOC, a unit of Indian Oil Corporation, the rest.
The Cabinet also allowed bunkering companies already registered with the government to import jet fuel.
Sri Lanka needs about 1.2 million litres of so-called A1 jet fuel a day to supply airlines but the CPC has been unable to meet the requirement, the government said in a statement.
"The Cabinet made this decision to ensure that flights are not disrupted due to the fuel shortage," it said.
Wijesekera flew to Qatar late on Monday night while Education Minister Susil Premajayanth is due to arrive in Russia on July 3.
Wijesekera hopes to find a long-term fuel supplier in Qatar who is "willing to work with Sri Lanka`s foreign exchange and other challenges", said a ministry official, who declined to be identified as he is not authorised to speak to media.
Wijesekera told reporters on Sunday Sri Lanka had been in talks with various countries, including Russia, for weeks on buying fuel.
Traffic was light on Tuesday on the streets of the main city of Colombo, with city schools shut and most public and private sector employees working from home.
But buses and trains were running and shops were open for groceries and other essentials.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
12:40 PM IST