No threat of fuel shortage - State Minister

State Minister of Power and Energy D.V Chanaka has assured that there is no threat prevalent of a fuel shortage.

Emphasisng that the necessary tenders for fuel imports required until June 2024 have been completed, Chanaka ensured an uninterrupted fuel supply until then, further highlighting that Sri Lanka’s fuel imports remain unaffected by the ongoing conflict between Israel and Palestine.

He also highlighted that by entrusting the supply of fuel to Sinopec Company of China, the government expects to save more than US $ 500 million in foreign exchange.

The State Minister made these statements during a press briefing held today (19 Oct.) at the Presidential Media Centre (PMC) under the theme ‘Collective Path to a stable country’.

State Minister D. V. Chanaka further stated,

“Recently, our country faced a significant fuel crisis, with fuel shortages and long queues at gas stations. However, we successfully resolved this situation within a short period.

When considering the month of January 2022, it’s worth noting that crude oil prices in the world market were relatively low, with a barrel of crude oil priced at 50 USD. In the following months, it increased to 65 USD and later, due to various factors including the Russian-Ukrainian conflict, it reached 100 USD per barrel. Subsequently, it decreased to 80 USD.

This year, after a year and a half of gradual increases, the price of crude oil has slightly decreased. Especially, in the first six days of this month, the world market saw a decrease of about 4% in crude oil prices. However, recent events in the Gaza Strip caused a 4% increase in fuel prices globally, nullifying the relief we expected from falling crude oil prices.

Though Israel and Palestine aren’t significant fuel producers or distributors in the world market, Iran’s potential involvement in the situation adds to the uncertainty in the global market.

Despite the conflict in the Gaza Strip, Sri Lanka’s fuel imports have not been disrupted. Tenders for fuel supply have been awarded up to June of next year, ensuring a steady supply of fuel in the country. Nevertheless, some uncertainties persist.

In addition, we have allowed three other suppliers, including China’s Sinopec, to provide fuel to our country. Sinopec has already commenced operations in Sri Lanka, resulting in savings of approximately 40 million USD in foreign exchange per season. It is anticipated that these measures will contribute to saving over 500 million USD in foreign exchange annually.

Furthermore, these actions have helped reduce the risk to the dollar reserves maintained by the Ceylon Petroleum Corporation, and efforts are being made to pass on these benefits to consumers. Notably, we have established a reserve of 200 million USD for oil purchases for the first time.”