Bankrupt Sri Lanka seeks cheap Russian oil

Cash-strapped Sri Lanka on Sunday announced it was sending ministers to Russia and Qatar to try to get cheap oil, a day after the government said it was nearly out of fuel.

In the meantime, the government has extended a two-week closure of non-essential government offices until further notice to save fuel, while retaining only a small staff to provide minimal services.

Minister of Energy Kanchana Wigeseker said the two ministers would travel to Russia on Monday to discuss getting more oil after buying 90,000 tons of Siberian oil last month.

The shipment was arranged through Coral Energy, a Dubai-based intermediary, but politicians are 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 agree on preferential terms,” Wijesekera told reporters in Colombo.

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

There were enough fuel supplies to meet the demand in less than two days and it was reserved for essential services, Viesekera said, apologizing for the situation.

State-owned Ceylon Petroleum Corporation on Sunday raised diesel prices by 15% to Rs 460 ($1.27) per liter and gasoline by 22% to Rs 550.

Since the beginning of the year, diesel prices have almost quadrupled and gasoline prices have nearly tripled.

Wijesekera said new oil supplies would be delayed indefinitely and urged motorists to stay out of line until he introduced a token system for a limited number of vehicles daily.

USA sum up

Meanwhile, a delegation from the US Treasury and the State Department arrived to “explore the most effective means of US support for Sri Lankans in need,” the US embassy in Colombo said in a statement.

“As Sri Lankans face some of the worst economic challenges in their history, our efforts to support economic growth and strengthen democratic institutions have never been more important,” said US Ambassador Julie Chang.

The delegation included Deputy Assistant Secretary of the Treasury for Asia Robert Caprot and Deputy Assistant Secretary of State for South and Central Asian Affairs Kelly Keiderling.

The embassy said it had released $158.75 million in new funding over the past two weeks to help Sri Lankans.

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

The UN noted that four out of five people in the country of 22 million have reduced their food intake due to severe shortages and skyrocketing prices.

Prime Minister Ranil Wickremesinghe warned parliament on Wednesday that more difficulties lay ahead.

“Our economy is facing total collapse,” Wickremesinghe said. “Now we are facing a much more serious situation, in addition to even greater shortages of fuel, gas, electricity and food.”

Unable to repay its $51 billion foreign debt, the government defaulted in April and is in talks with the International Monetary Fund for possible bailouts.

Sri Lanka’s official inflation was 45.3% at the end of May, according to official figures, but private economists estimated it at 128%, the second highest in the world after Zimbabwe.

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