Local firms resort to barter system following fuel shortage
Desperate times call for desperate measures. Sri Lankan companies are at wits end to make things work and continue their businesses.
So much so that some of them have resorted to barter systems when settling suppliers. Fuel shortages and fuel price increases are seeing entire supply chains of business being disrupted, businesses say.
“Now we pay our suppliers half in legal tender and half in diesel,” a CEO of an export manufacturing company told the Business Times on Monday. Another company in value added exports agreed saying they have been doing the same for the last three months since the queues for fuel started. “We need to get our supply going. This is another business strategy,” the CEO of the company said.
A crippling shortage of foreign reserves has led to long queues for fuel, cooking gas and other essentials for the past three months. Shortages in fossil fuels such as petrol to run power plants have resulted in massive power cuts across the island.
The Ceylon Petroleum Corporation grants priority to exporting firms when distributing diesel. These companies get them in bowser loads, hence they can afford to indulge in such barter.
“Our suppliers are the lifelines of our companies. If they close without diesel, we cannot make this work. In turn they too will have to close down and many of their employees will be without jobs. It really has a devastating chain effect. We are pushed against the wall,” a CEO of a tea company told the Business Times. He added that it is better to give the suppliers fuel to run their operations to make sure their businesses are intact.
Companies say that consistent power cuts force them to run their businesses and offices on generators powered by diesel. These are all costs the companies had not factored in before.
The main focus of firms is to somehow run their businesses. However, with rising running costs plans for the future are going bust. Add the newly introduced taxes and business really don’t have anywhere to go.
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