Exporters in a fix as state scrambles to source fuel

The Ministry of Finance will be looking at getting fuel stocks for one to two months only, messing up most long-term plans of exporters.

As such the Treasury will only focus on shorter timelines to get fuel through credit swaps like the Indian swap obtained on Monday. “There is no crisis right now but as exporters, we plan ahead for six months to one-year timelines,” an exporter told the Business Times on Monday. He pointed out that exporters and manufacturers in general need to have a guarantee to be able to get business from buyers abroad. “Treasury officials told us that they will be looking for short term procurements. Such a policy stance upsets the sustainability of our businesses,” he added.

Another exporter said that most manufacturers have high-capacity power generators, but they cannot run without diesel. “The worry we have is that energy sources are not procured consistently rather it's on a staggered basis,” a second exporter said.

Janaka Ratnayake, Chairman Public Utilities Commission of Sri Lanka (PUCSL) recently told media that if the country must buy emergency electricity, diesel plants will be utilised. “The main issue we have now is the lack of diesel. Electricity is not an issue. We have enough generators. The problem we have is the lack of crude oil. If there is crude oil, we do not need to buy electricity, and would have not faced this issue.”

Early this month the government reached an agreement to procure 450,000 barrels of crude oil for Sapugaskanda oil refinery from Cyprus-based Terra Nevis Group. The government expects to receive crude oil for the Sapugaskanda oil refinery by July. According to a Cabinet note on Tuesday petrol and diesel, 40,000 metric tonnes each will be procured from the Indian Oil Corporation (IOC), as part of the government’s bid to tide over the current fuel and energy crisis.

“These are short term fixes. We really need consistency in policy to be efficient,” a third foreign exporter said.