Sri Lanka's Energy Minister, Udaya Prabath Gammanpila, has denied concerns that the country will face fuel shortages as he announced that the island's only oil refinery, the Sapugaskanda refinery, would remain closed for 50 days.
This announcement comes as Sri Lanka is in the midst of an economic crisis with average monthly food prices rising 63% in the past month. Earlier this year a Bloomberg model reported that Sri Lanka’s default probability was the highest in Asia with the organisation estimating a 27.9% chance of one-year default. Sri Lanka owes at least $2.5 billion in debt over the next 12 months.
The closure of the refinery follows a series of import bans intended to conserve the country's low foreign currency reserves. Gammanpila stressed the need to limit foreign exchange for only essential commodities adding that the import of crude oil would resume once the country's dollar deficit is overcome by obtaining credit facilities. He further claimed that the country would not face a shortage despite currently only having enough for forty days.
The minister further explained that only 43 per cent of the crude oil can be used to produce fuel so it was decided to import fuel instead of crude oil.
Commenting on the island's financial crisis, Gammanpila further claimed that the country would be able to make its repayment of a USD $500 million loan due in January and a USD $1000 million loan due in June.
“We received $300 million from Bangladesh and $350 million from China but this is not enough,” Gammanpila stated as he noted that Sri Lanka consumed fuel worth $350 million every month.
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