News
Struggle to avert a fuel shortage
Hurt by a refinery closure and US sanctions on Iran, Sri Lanka is to make a desperate appeal to Washington for concessions to avoid a fuel shortage, Petroleum Industries Minister Susil Premajayantha said yesterday.
The closed refinery. Pic by M.A Pushpakumara
“We want to discuss with US authorities ways of clearing the obstacles for opening Letters of Credit through banks to import iranian crude,” he said, warning that the country’s fuel bill had risen to US$ 5 billion or around Rs. 650 billion.
He said in June this year, the US exempted Sri Lanka and six other countries from financial sanctions, after they agreed to scale down crude oil imports from Iran. “Even the 10 out of 13 crude oil shipments from Iran exempted by the US from sanctions cannot be imported since it was not possible to engage in dollar transactions,” he added.
Minister Premajayantha said the Government had to incur a massive loss due to the closure of the Sapugaskanda refinery and for the import of refined petroleum products. He told Parliament on Thursday that the cost of importing crude and refined fuel had increased by as much as US$ 1.2 billion (Rs. 155 billion), from US$ 3.8 billion to US$ 5 billion.
In the meantime, the Government had made arrangements to buy crude from Saudi Arabia and other oil producing nations and orders had been placed for 135,000 MT of Arabian light oil and another 80,000 MT in the open market, he said.
According to Ceylon Petroleum Corporation (CPC) sources, a Dubai-based supplier had confirmed that a fresh crude stock would arrive in Colombo on November 8 or 9. A Saudi supplier had undertaken to deliver supplies in Colombo on November 13 or 14, he said, noting that the CPC was awaiting another shipment of crude from a third supplier on December 7 or 8.
Mr. Premajayantha said he would present a Cabinet memorandum soon to modernise the Sapugaskanda refinery at a cost of US$ 500 million (Rs. 65 billion). It would increase the capacity of the refinery from the current 30,000 barrels a day to 50,000 barrels, he said.
Meanwhile, Trade Ventures Inc, a supplier of crude oil, has filed a case in the Colombo High Court demanding that the CPC pay US$ 750,246.83 (Rs. 97 million) and British pounds 6,590 (Rs. 1.3 million) which was awarded by the arbitral tribunal in London for default of payment against a shipment of crude oil from Kharg Island in Iran to Colombo.
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