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Sri Lanka Economic Crisis: IOC Provides Fuel As Government Pumps Go Dry

On Monday, the Sri Lankan government announced that only essential services will operate from midnight till July 10 and all other operations will be temporarily suspended as the crisis-hit nation faces an acute fuel shortage

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Sri Lanka crisis Photo by AP/PTI

Lanka IOC, the subsidiary of Indian Oil Corporation in Sri Lanka, kept its pumps open throughout Tuesday as the cash-starved government’s fuel entity’s fuel stations did not operate in the island nation due to the worsening energy crisis.

On Monday, the Sri Lankan government announced that only essential services will operate from midnight till July 10 and all other operations will be temporarily suspended as the crisis-hit nation faces an acute fuel shortage.

A LIOC spokesperson said they issued petrol to private vehicle owners on Tuesday but had to limit the issues due to the demand.

The government issued tokens to vehicles that had waited in long lines for over 3 days. The military, which issued the tokens, said they would be given priority when the normal deliveries are resumed by the state-run Ceylon Petroleum Corporation (CPC).

Sri Lanka’s unprecedented economic crisis caused by forex shortages has led to a severe crisis in the energy sector. Fuel shortages have seen long queues at retailers and with the end of the credit line worth $700 million granted by India, the pumps have run dry.

The Sri Lankan government is now exploring options to purchase discounted oil from Russia, as the island nation desperately looks to replenish its dwindling fuel stocks amid an unprecedented economic crisis due to a crippling shortage of foreign exchange reserves.

Angry people waiting in the queue for the fuel want President Gotabaya Rajapaksa and his government to resign immediately for their inability to tackle the fuel shortages.

Since June 24, no fuel tankers with supplies have arrived in the island nation while the CPC says no new orders have been placed.

On Monday, Sri Lankan Energy Minister Kanchana Wijesekera visited Qatar to work out a credit purchase agreement with the oil state.

Meanwhile, the government’s statistics office said Tuesday that the economic growth in the first quarter of this year is projected to see a minus 1.6 per cent growth due to the economic crisis.

A release said fuel shortages had impacted all sectors with reduced production contributing to the negative growth.

A decision to stop chemical fertilizer imports due to the forex crisis too had contributed to the loss of crops.

The nearly-bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, had announced in April that it is suspending nearly $7 billion foreign debt repayment due for this year out of about $25 billion due through 2026. 

Sri Lanka's total foreign debt stands at $51 billion.

Sri Lankans continue to languish in long fuel and cooking gas queues as the government is unable to find dollars to fund imports.

So far, there have been an estimated twelve deaths in fuel queues due to exhaustion, physical ailments, or accidents.

Indian credit lines for fuel and essentials have provided lifelines until the ongoing talks with the International Monetary Fund could lead to a possible bailout.

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