Bankrupt Sri Lanka seeks discounted Russian oil

• Sri Lanka to send ministers to Russia and Qatar to try to secure cheap oil.
• The cash-strapped government says it is almost out of fuel. Government extends closure of non-essential state institutions to save fuel.
• Fuel reserves are sufficient for less than two days’ usage, the minister says. About 1.7 million residents need “life-saving assistance”, Said United Nations.

Cash-strapped Sri Lanka announced on Sunday that it would send ministers to Russia and Qatar to try to secure cheap oil, a day after the government said it was almost out of fuel.

Meanwhile, the government has extended a two-week closure of non-essential state institutions until further notice in order to save fuel, with only a skeleton staff remaining to provide bare-bones services.

Energy Minister Kanchana Wijesekera announced that two ministers will travel to Russia on Monday to discuss obtaining additional oil following the purchase of 90,000 tonnes of Siberian crude last month.

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That shipment was arranged through Coral Energy, a Dubai-based intermediary, but politicians have been urging the authorities to negotiate directly with President Vladimir Putin’s government.

“Two ministers are going to Russia and I will go to Qatar tomorrow to see if we can arrange concessionary terms,” Wijesekera told reporters in Colombo.

Wijesekera had announced on Saturday that Sri Lanka was virtually out of petrol and diesel after several scheduled shipments were delayed indefinitely due to “banking” reasons.

Fuel reserves were sufficient to meet less than two days’ demand and it was being reserved for essential services, Wijesekera said while apologising for the situation.

The state-run Ceylon Petroleum Corporation on Sunday hiked the price for diesel by 15 percent to 460 rupees ($1.27) a litre and petrol by 22 percent to 550 rupees.

Since the beginning of the year, diesel prices have gone up nearly four-fold and gasoline has almost tripled.

Wijesekera said there would be an indefinite delay in getting new shipments of oil and urged motorists not to queue up until he introduces a token system to a limited number of vehicles daily.

A delegation from the US Treasury and the State Department meanwhile arrived to “explore the most effective ways for the US to support Sri Lankans in need”, the US embassy in Colombo said.

“As Sri Lankans endure some of the greatest economic challenges in their history, our efforts to support economic growth and strengthen democratic institutions have never been more critical,” US ambassador Julie Chung said in a statement.

US Deputy Assistant Secretary of Treasury for Asia Robert Kaproth and Deputy Assistant Secretary of State for South and Central Asia Kelly Keiderling were in the delegation.

The embassy said it had committed $158.75 million in new financing in the past two weeks to help Sri Lankans.

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About 1.7 million residents need “life-saving assistance”, according to the United Nations which issued a flash appeal last week.

Four out of five people in the nation of 22 million have reduced their food intake due to severe shortages and galloping prices, the UN noted.

Prime Minister Ranil Wickremesinghe warned parliament on Wednesday that more hardships were on the way.

“Our economy has faced a complete collapse,” Wickremesinghe said. “We are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food.”

In April, the government declared default on its $51 billion foreign debt and is negotiating a possible bailout with the International Monetary Fund.

According to official data, Sri Lanka’s official inflation rate at the end of May was 45.3 percent, but private economists put it at 128 percent, the second-highest in the world after Zimbabwe.