Sri Lanka has been exploring the option of procuring fuel, required for the operations of power plants, from India as regular supplies are affected amid a severe foreign exchange crisis. This came days after New Delhi had assured Sri Lanka of a $500 million line of credit for fuel purchase. 

Power plants in Sri Lanka are operating below their regular capacities as the supply from the state-run Ceylon Petroleum Corporation (CPC) remains irregular for over a week now, resulting in frequent power cuts across the country, including in capital Colombo.   

“We are looking for alternatives,” Sri Lanka’s Power Minister Gamini Lokuge told Sri Lanka’s Derana Television. “We are looking whether we can take some furnace oil from the Lanka Indian Oil Corporation (LIOC) for the next few days.”

LIOC, a subsidiary of India’s state-owned Indian Oil Corporation LTD (IOCL), maintains 14 fuel tanks in the eastern Sri Lankan city of Trincomalee. Two nations had signed a fresh agreement on the joint development of Trincomalee Oil Farm a few weeks back.  

Ceylon Electricity Board (CEB), the country’s state-run power regulator, had last week published a schedule for planned load shedding in the wake of insufficient furnace oil. However, amid domestic political pressure, the plan was taken off after Power Minister Lokuge assured supply. 

“Till 22 we have to somehow find a way to get oil for power generation,” the minister said. Although officials had been warning for weeks about the critical level of fuel, the ministry continued to ignore the issue until it started impacting production capacity. 

Currently, Sri Lanka has been facing an economic crisis of the scale it had not witnessed in decades, with the supplies of essentials, fuel, and food all at risk of running out. Its foreign exchange reserve touched $1.5 billion in October last year and the data of the following months remained in question. 

Colombo has been looking for urgent economic assistance from both, India and China. 

In a phone call with Sri Lankan Finance Minister Basit Rajapaksa, Indian External Affairs Minister S Jaishankar had assured that New Delhi will provide $1.5 billion lines of credit, covering the imports of fuel, food, essentials, and medicines. 

Similarly, Beijing has also offered to provide “all possible assistance” but has not revealed the details. 

(SAM)