Sri Lanka will pay a whopping $72.6 million to buy a shipment of 90,000 tonnes of Russian oil that has been docked for weeks at the port of Colombo. The Energy Minister said on Saturday that the country intends to restart its refinery and tackle the serious energy crisis.
Energy and Energy Minister Kanchana Wijesekera told reporters, “I have reached out to many countries, including Russia, to support the imports. rough and other petroleum products,” according to a Reuters report.
Wijesekera said the 90,000-ton consignment was ordered through Dubai-based Coral Energy. He said the payment would help restart the country’s only refinery, which has been shut since March 25.
Further, the Energy Minister revealed that the next shipment will also be sourced from the same company. Another consignment would be needed within the next two weeks to keep the refinery running continuously.
This year Sri Lanka suffered a major setback not only financially but also politically. Lacking foreign exchange, the island nation is struggling to pay for fuel, food and medicine imports. Also, the unprecedented financial crisis prompted Sri Lanka to default on some of its external loans. With high global crude oil prices further straining the economy, queues of two-wheelers and cars, sometimes miles long, outside fuel stations have become a familiar sight in Sri Lanka.
Like other countries in Asia, the island nation aims to move to long-term crude oil tenders to hedge against high crude oil prices. However, the minister said, “But the depleting foreign exchange reserves have hampered its ambitions.”
Wijesekera estimates that Sri Lanka will need $568 million to pay for a dozen fuel shipments needed in June.
Notably, Sri Lanka is struggling to pay $31 million for a furnace oil shipment docked at the port of Colombo. State-run Ceylon Petroleum Corporation (CPC) needs $735 million to clear letters of credit for past oil purchases.
The country’s total foreign reserves stood at $1.82 billion at the end of April 2022.