Further curbs on fuel use as crisis deepens

Subsidies to be offered to vital areas such as public transport

The government may be forced to introduce further curbs on fuel use if it cannot find new sources to obtain crude oil, Petroleum Industries Minister Susil Premajayantha warned yesterday.

As a last ditch attempt, the Ceylon Petroleum Corporation will negotiate directly with state-owned ventures abroad leaving out the middlemen, he said. The move would mean the practice of calling for bids through local agents of foreign suppliers would be suspended, he added.

Mr. Premajayantha said the curbs to be introduced were yet to be determined. In a bid to ensure the measures had the minimum impact on the public, there would be a subsidy scheme for key sectors like public transport.

Since oil supplies from Iran accounts for nearly 93 per cent of Sri Lanka’s crude oil imports, the country is struggling to find other sources as US sanctions relating to deals with Iran are to come into force in June.

Therefore Sri Lanka was compelled to find another source of petroleum products before July, which was not an easy task, the minister said.

Mr. Premajayantha said the government had pursued alternatives to avoid a major energy crisis in the event of a bigger economic embargo by the US and a possible closure of the Strait of Hormuz.

Oil prices rose to a 10-month high above $125 a barrel recently prompting the government to directly negotiate with oil producing countries including Saudi Arabia and Oman to get oil on concessionary terms.

The minister said he had held discussions with petroleum authorities in these countries and talks between officials were underway. There were no discussions with Qatar which is not an oil producing country but a major producer of Liquefied Natural Gas.

He also said the Ceylon Petroleum Corporation was exploring the possibility of importing crude and refined oil directly from oil producing countries under government to government contract basis without depending on agents and oil traders.

However suppliers registered with the CPC charged that the CPC was planning to allow a single supplier to monopolise the deals under the cover of the Iran fuel crisis.