Lankan Fuel Pumps, May Go Dry By April End; India’s USD 500 Mn Credit Line Exhausting Rapidly

Sri Lanka may run out of diesel by the end of this month with the USD 500 million line of credit extended by India for fuel purchase exhausting fast amidst the unprecedented shortage of foreign reserves.

Sri Lanka is facing its worst economic crisis since gaining independence from the UK in 1948. People have been protesting for weeks over lengthy power cuts and shortage of gas, food and other basic goods. The public anger has prompted nearly all Cabinet ministers to quit, and scores of lawmakers to leave President Gotabaya Rajapaksa's government. According to officials, fuel shipments to Sri Lanka started coming in late March due to the urgency of the situation although they were scheduled to start from April 1.

Three more Indian shipments are due on April 15, 18 and 23 and the facility would be fully exhausted by then unless the Sri Lankan government sought for a further extension from India, they said. Diesel is widely used for public transport and thermal power generation in the country. Closure of a few thermal power plants due to lack of diesel has already caused power cuts lasting over 10 hours daily. The country's only refinery had to be shut down twice in November 2021, since it was unable to pay for imports.

Enraged people got into the streets for endless agitations against the government, calling for its resignation for the incompetence. Meanwhile, the Sri Lanka Medical Association (SLMA) has warned President Rajapaksa about the shortage of even the most essential medicines in the island nation due to the forex related economic crisis. The SLMA says medicine, equipment and reagents are in short supply in the health sector. They have stopped routine surgery in order to reserve the available facilities for life threatening emergencies.

It has sought a meeting with the president to discuss a contingency plan. Separately, garment export industry association, Sri Lanka Joint Apparel Association Forum, has also written to Rajapaksa urging short-term solutions to the current crisis. It has said that power and fuel shortages had led to the closure of many small-scale businesses. Garment exports, mainly to the US and the European Union markets, accounts for about 6 per cent of the GDP. On Thursday night, a group of protesters tried to break barricades opposite the Temple Trees in Colombo, the prime minister's office cum residence.

The government has blamed the public protests as politically motivated and accused the Opposition party, Janatha Vimukthi Peramuna, of organising them. Despite the declaration of a state of emergency and a weekend curfew, people joined the protests calling for the resignation of Rajapaksa. Protesters even blocked the access roads to Parliament. The President late Tuesday night revoked the emergency after huge public protests demanded his resignation. He and his elder brother, Prime Minister Mahinda Rajapaksa, continue to hold power in Sri Lanka, despite their politically powerful family being the focus of public ire.

President Rajapaksa has defended his government's actions, saying the foreign exchange crisis was not his making and the economic downturn was largely pandemic driven with the island nation's tourism revenue and inward remittances waning. India had in February extended a USD 500 million credit line to Sri Lanka to fund the country's fuel purchases, as the island nation struggled to overcome its worst financial and energy crisis in decades.

(PTI)