Sri Lanka out of cash to buy oil: minister

Sri Lanka's state-run petroleum company has run out of cash to buy oil, and fuel shortages across the country could get worse, the energy minister said yesterday. 

Udaya Gammanpila said the loss-making Ceylon Petroleum Corporation (CPC) continued to haemorrhage cash and was out of money to procure supplies from abroad. He said the CPC suffered losses of up to 42 percent on the sale of diesel at government-mandated prices.

Sri Lanka's worsening foreign-exchange shortage has seriously impacted the energy sector, which depends entirely on imports for its oil needs. The shortage of furnace oil has already led to the shutting down of thermal electricity generators, resulting in unannounced power cuts across the Indian Ocean island.

Sri Lanka's economy is also seeing a scarcity of food, with supermarkets forced to ration staple foods including rice. The shortages pushed food inflation to a record 25 percent last month.

The island was handed temporary relief with a $500 million credit line from India last month to finance oil purchases sufficient for about six weeks. Sri Lanka has also sought more loans from Beijing to help repay its existing Chinese debt, which accounts for about 10 percent of the country's external borrowings.