Sri Lanka has contacted several companies suggested by the Russian embassy in Colombo to buy crude oil, Energy Minister Kanchana Wijesekera said on Sunday, in an attempt by the indebted island nation to get oil on credit for maintain its only oil refinery in operation.
Wijesekera told the media that the Russian ambassador in Colombo “asked me to send the company’s responses, and he will also intervene in the process.”
The minister said he had answers from Russian companies suggested by the ambassador, Sri Lanka’s Economy Next news portal reported.
“We also sent the message to Sri Lanka’s Ambassador to Russia, Janitha Liyanage,” the minister said, adding that the process was taking time.
Sri Lanka has already bought a shipment of Siberian crude from Dubai-based Coral Energy on the international market, officials said.
However, Russian state enterprises are reportedly giving crude at lower prices to countries that can afford to pay.
Sri Lanka’s only refinery is now operating with the latest shipment of Siberian crude.
Sri Lanka is currently facing its worst economic crisis since its independence from Britain in 1948.
Due to monetary instability triggered by central bank money printing, Sri Lanka is experiencing currency shortages, making it difficult to find fixed price dollars for large import bills.
The economic crisis has caused severe shortages of essential items like food, medicine, cooking gas and other fuels, toilet paper and even matches, with Sri Lankans forced to queue for hours outside shops to buy fuel and cooking gas.
Lanka is trying to get crude on credit like it did in previous currency crises when the central bank printed money and triggered currency shortages.
Sri Lanka’s oil bill has reached $550 million a month by June 2022 and the energy ministry has been talking to the central bank to secure dollars.
The central bank has depleted its reserves after two years of printing money, but the agency has yet to transition to a free float that will balance outflows and inflows.
Sri Lanka owes oil companies $730 million for oil imported on credit, and they are unwilling to provide fuel without upfront payments or deposits, Wijesekera said.
“For crude oil as well, we contacted several countries,” Wijeskera said, adding that he had discussions with the embassies of several other countries.
“Even though we approached companies, due to the financial situation and the ratings of banks in the country, most companies do not agree to participate in loan programs to obtain oil,” he said. .
India has aided Sri Lanka with thousands of tons of diesel and gasoline, in addition to food and medical supplies, to help ease the severe fuel shortage in the indebted island nation.
Sri Lankan Prime Minister Ranil Wickremesinghe said on Wednesday that no country except India was providing the crisis-hit island nation with money for fuel.
With the reopening of the Sapugaskanda refinery, the crude stock available is being used in minimal quantities to continue refinery operations.
The subcommittee also authorized the import of four other crude oil vessels, Wijesekara said.
“We can use them in the refinery to increase current capacity. Until then, we are keeping production at a minimum level,” he said.
According to Wijesekara, currently around 350 MT of gasoline and 600 MT of diesel are produced by the refinery, along with fuel oil and LPG.
“One ship needs about $80 million. We have one company in the bidding process for three ships,” Wijesekara said, adding that he had cleared three other companies to import oil. raw.
He added that only one company, however, agreed to export two ships on June 28 and 29.
(follow UK Time News on Social Platforms.)