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Sri Lanka suspends fuel sales as economic crisis deepens

#Sri #Lanka #suspends #fuel #sales #economic #crisis #deepens

Financially strapped Sri Lanka announced a two-week halt to all fuel sales except essential services from Monday and called for a partial shutdown as its unprecedented economic crisis deepened.

The South Asian nation is facing its worst economic meltdown since gaining independence from Britain in 1948, and has been unable to finance imports of essential goods since late last year.

As fuel reserves hit rock bottom and supplies barely lasted another day, government spokesman Bandula Gunawardana said the sales ban was to save gasoline and diesel for emergencies.

He urged the private sector to allow employees to work from home as public transport grinds to a halt.

“As of midnight today, no fuel will be sold except for essential services like the health sector because we want to conserve the small reserves we have,” Gunawardana said in a pre-recorded statement.

He apologized to consumers for the shortages: “We regret the inconvenience caused to people.”

-electric shock-

The sudden fuel ban came as the loss-making state power monopoly demanded a massive price increase for its poorest customers.

The Ceylon Electricity Board (CEB) lost 65 billion rupees ($185 million) in the first quarter and called for a nearly 10-fold price hike for the heavily subsidized smallest electricity consumers, the Public Utilities Commission of Sri Lanka (PUCSL) said.

Currently, anyone using less than 30 kilowatts a month pays a flat rate of Rs.54.27 ($0.15), which the CEB wanted to increase to Rs.507.65 ($1.44).

“A majority of domestic consumers will not be able to afford that kind of steep increase,” PUCSL Chairman Janaka Ratnayake told reporters in Colombo.

“So we proposed a direct subsidy from the Treasury Department to limit the increase to less than half of what they asked for.”

As part of the measures to alleviate the foreign exchange crisis that led to the energy crisis, the CEB will be allowed to charge dollars to users who earn foreign exchange, such as exporters.

The move aims to help the electric utility raise dollars to fund imports of oil and spare parts it desperately needs but can’t source because of the country’s foreign exchange crisis.

The country is also facing record-high inflation and lengthy power outages, all of which have contributed to months of protests — sometimes violent — that have seen President Gotabaya Rajapaksa step down.

Last week all state schools were shut down and state facilities were run with emergency staff to reduce commuting and save oil.

The state sector shutdown was due to end this week but is now being extended to July 10, when Gunawardana vowed to restore fuel supplies.

– Broken Promise –

On Sunday, the government promised it would introduce a token system to ration the distribution of limited supplies of fuel, but it fell through.

Long queues formed in front of the few pumping stations that still had supplies.

Sri Lanka is looking for cheap oil from Russia and Qatar.

Earlier this month, the United Nations launched an emergency response to the island’s unprecedented economic crisis, providing care to thousands of pregnant women facing food shortages.

Four out of five people in Sri Lanka have started skipping meals as they cannot afford to eat, the UN said, warning of a looming “looming humanitarian crisis” with millions in need of assistance.

Sri Lanka defaulted on its $51 billion foreign debt in April and is in talks with the International Monetary Fund for a bailout.

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