Sri Lanka will pay $72.6 million to buy 90,000 tonnes of Russian oil

Power and Energy Minister Kanchana Wijesekera told reporters, “I have reached out to multiple countries, including Russia, for support to import crude and other petroleum products,” as per a Reuters report.

Wijesekera said that the 90,000-tonne consignment was ordered through Dubai-based Coral Energy. He added that the payment would facilitate restarting the country’s sole refinery, which has been closed since March 25.

Further, the energy minister revealed that the next shipment will also be ordered from the same company. Another consignment will be needed within the next two weeks to keep the refinery running continuously.

This year, Sri Lanka took a massive blow not just economically but also politically. Due to a shortage of foreign currency, the island nation has struggled to pay for fuel, food, and medicine imports. Also, the unprecedented financial crisis further pushed Sri Lanka in defaulting on some of its external debts. With high global crude prices impacting the economy further, queues of two-wheelers and cars outside fuel stations, sometimes miles long, have become a familiar sight in Sri Lanka.

Just like other countries in Asia, the island nation also aims to shift towards long-term crude tenders to hedge against high crude spot prices. However, the minister said, ” but dwindling foreign exchange reserves have hampered its ambitions.”

Wijesekera estimates Sri Lanka to need $568 million for paying for a dozen fuel shipments needed in June.

Notably, Sri Lanka is struggling to pay $31 million for a furnace oil shipment docked at Colombo’s port. State-run Ceylon Petroleum Corporation (CPC) needs $735 million to clear letters of credit for previous oil purchases.

The country’s total foreign reserves stand at $1.82 billion by end of April 2022.