Sri Lanka’s already dire economic crisis deepened as oil prices hovered near $110 a barrel. Vehicles are stranded with empty tanks, power cuts depriving students of study time for exams and shopping mall air conditioners being switched off to conserve energy.
The South Asian island nation was already so short of currency that authorities restricted imports of cars and fertilisers. It now has to scour dwindling reserves to pay for the more expensive oil needed to keep the economy running.
Officials have announced nationwide power cuts of up to 7 1/2 hours a day because they cannot supply enough fuel to power stations. Hydroelectricity, the other energy mainstay, is often depleted during the dry season. It will end only with monsoon rains which usually start in May.
“We are not getting all the three types of diesel, naphtha and furnace oil and hence we are forced to have such extended power cuts,” Janak Ratnayake, chairman of the Public Utilities Commission of Sri Lanka, told reporters.
Bus services important to many workers are also in trouble, diesel is not available and passengers are sometimes stranded mid-way.
Ravindra Mendis, owner of seven passenger buses, said four are still idle due to fuel crisis.
This diesel shortage is a serious hardship, Mendis said as he waited patiently to buy fuel at a station in the city of Gampaha, 24 kilometers (15 miles) north of the capital Colombo.
He said that we are losing revenue and time as we have to wait in long lines for hours to buy diesel.
Energy Minister Uday Gammanapila said high oil prices are actually an additional burden in a foreign exchange crisis. He said stations are rationing fuel to prevent people from storing diesel at home for their vehicles and power generators.
Sri Lanka is struggling to pay off foreign debt for infrastructure projects that are not making money. A repayment of $1 billion is due in July this year on foreign debt obligations of $7 billion.
Due to low dollar reserves, banks are not ready to open lines of credit even for import of essential commodities like milk powder, medicine and fuel.
“The ships are waiting for payment before refueling. Due to this delay, limited stock is being released in the market and fuel stations are limiting sales,” Gammanapila said.
“The crisis in our country is not about fuel or power generation. This is a foreign exchange crisis,” he said at a press conference.
The expected $1 billion loan arrangement from India may be somewhat easing, but fighting in Ukraine threatens to affect another important source of foreign exchange: tourists from both Ukraine and Russia.
Political and international affairs analyst Ranga Kalanasuriya said the two countries are important markets for Sri Lankan tea and tourism.
“We have already jumped from the frying pan into the fire and we don’t know where we will be next,” said Kalanasuriya.
“This is a big concern because the cost increases for most businesses,” said Shiran Fernando, chief economist of the Ceylon Chamber of Commerce, a collection of trade and industrial associations in Sri Lanka.
Major malls with big fashion brands have been forced to shut down air conditioners despite hot, humid weather as they lack diesel to run generators.
But compared to the inconvenience of shopping in the tropical heat, farmers fear that their crop will be reduced due to a shortage of fertilizer. And the lack of fuel is eating into study time for children whose studies have already been disrupted in the past two years because of the pandemic.
Viyara Fernando, who was preparing for the crucial final exams, was already taking her classes online. “I am a night owl and I do my studies at night and whenever I wake up. But now I wake up every day at three in the morning because of the power cut.”
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