Fuel crisis: Three shipments at sea awaiting payments

Three consignments of fuel consisting of crude oil, furnace oil, and 92-95 octane petrol ordered on spot tendering are still waiting in international waters near Sri Lanka for clearance as the Government has been unable to dispatch necessary funds, 

A steady supply of furnace oil is critical to keep a number of thermal power plants operational, with the Ceylon Electricity Board (CEB) struggling to generate adequate electricity to keep power cuts at a minimal level.

Sri Lanka has also been trying to revive the operation of its sole oil refinery, which produces kerosene and furnace oil as by-products. The shortage of kerosene, which is widely used for domestic cooking and in the coastal fishing sector, has further complicated the lives of many urban and suburban communities already affected by the gap in LPG supply.

It is learnt that these shipments have been ordered on spot buying despite the ability to use the already-active Indian Line of Credit (LOC) by the time the order had been placed. 

As a result, the Ceylon Petroleum Corporation (CPC) is currently incurring heavy losses in demurrage costs and overpayments amounting to millions of dollars.

The Sunday Morning reliably learns that the CPC has already incurred losses of over $ 3 million (as of 14 May) due to demurrage costs for these three shipments that are still pending clearance.

As the Government is yet to secure the necessary foreign exchange to clear these shipments, a senior official attached to the Ministry of Power and Energy who wished to remain anonymous said the clearing of the pending shipments may be delayed until June.

He told that the Ministry had secured sufficient stocks until the end of this month and the procurement processes had already commenced for the securing of required shipments for the month of June.

He stated that there were gaps between the shipments due to the foreign exchange crisis and that the Ministry was attempting to resolve the matters immediately.

“For the month of June we have started procurement and we are trying to complete as much as possible. Some of them are under a new credit line and we are now working with the Government of India,” he added.  

Commenting on the clearing of the three shipments awaiting approval from the Government, the official said that the shipments may have to wait until June due to the forex issue.

However,  Treasury Deputy Secretary Priyantha Ratnayake said the Government had $ 300 million – $ 100 million from the $ 1 billion line of credit and another $ 200 million from the earlier $ 500 million credit line – for fuel purchases.

Ratnayake stressed that one shipment would cost around $ 48 million.