SL may be compelled to buy more Russian oil – PM
Posted on June 12th, 2022

Courtesy Hiru News

COLOMBO, Sri Lanka (AP)
Sri Lanka may be compelled to buy more Russian oil as fuel runs low amid its worst economic crisis, PM tells the AP.

Prime Minister Ranil Wickremesinghe said he would first look to other sources, but would be open to buying more crude from Moscow. Western nations largely have cut off energy imports from Russia in line with sanctions over its war on Ukraine.

In a wide-ranging interview on Saturday, Wickremesinghe also indicated he would be willing to accept more financial help from China, despite his country’s mounting debt. And while he acknowledged that Sri Lanka’s current predicament is of its own making, he said the war in Ukraine is making it even worse and that dire food shortages could continue until 2024. He said Russia had also offered wheat to Sri Lanka.

Sri Lanka has amassed $51 billion in foreign debt, but has suspended repayment of nearly $7 billion due this year. The crushing debt has left the country with no money for basic imports. The shortages have spawned rolling power outages, and people have been forced to wait days for cooking gas and gasoline in lines that stretch for kilometers.

Two weeks ago, the country bought a 90,000-metric-ton (99,000-ton) shipment of Russian crude to restart its only refinery, the energy minister told reporters.

Prime Minister said Sri Lanka desperately needs fuel, and is currently trying to get oil and coal from the country’s traditional suppliers in the Middle East.

“If we can get from any other sources, we will get from there. Otherwise (we) may have to go to Russia again, he said.

Officials are negotiating with private suppliers, but Wickremesinghe said one issue they face is that ;there is a lot of oil going around which can be sourced back informally to Iran or to Russia.

;Sometimes we may not know what oil we are buying,; he said. Certainly we are looking at the Gulf as our main supply.

Since Russia’s invasion of Ukraine in late February, global oil prices have skyrocketed. While Washington and its allies are trying to cut financial flows supporting Moscow’s war effort, Russia is offering its crude at a steep discount, making it extremely enticing to a number of countries.

Like some other South Asian nations, Sri Lanka has remained neutral on the war in Europe.

Sri Lanka has received and continues to reach out to numerous countries for help including China, currently the country’s third-largest creditor.The prime minister said his government has been talking with China about restructuring its debts. Beijing had earlier offered to lend the country more money but balked at cutting the debt, possibly out of concern that other borrowers would demand the same relief.

China has agreed to come in with the other countries to give relief to Sri Lanka, which is a first step, Wickremesinghe said. “This means they all have to agree (on) how the cuts are to take place and in what manner they should take place.

Sri Lanka is also seeking financial assistance from the World Food Programme, which may send a team to the country soon, and Wickremesinghe is banking on a bailout package from the International Monetary Fund. But even if approved, he doesn’t expect to see money from the package until October onwards.

Wickremesinghe acknowledged that the crisis in Sri Lanka has been of its own making. Many have blamed government mismanagement, deep tax cuts in 2019, policy blunders that devastated crops and a sharp plunge in tourism due to the coronavirus pandemic. But he also stressed that the war in Ukraine, which has thrown global supply chains into a tailspin and pushed fuel and food prices to unaffordable levels, has made things much worse.

The Ukraine crisis has impacted our … economic contraction, he said, adding that he thinks the economy will shrink even further before the country can begin to recoup and rebuild next year.

I think by the end of the year, you could see the impact in other countries as well, he said. There is a global shortage of food. Countries are not exporting food.

The shortages have affected both the poor and the middle classes, triggering months of protests. Mothers are struggling to get milk to feed their babies, as fears of a looming hunger crisis grow.

Wickremesinghe said he felt terrible watching his nation suffer, “both as a citizen and a prime minister.

He said he hasn’t ever seen anything like this in Sri Lanka — and didn’t think he ever would. I have generally been in governments where I ensured people had three meals and their income increased, he said. “We’ve had difficult times. … But not like this. I have not seen … people without fuel, without food.Source: Foreign reports

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