Sri Lanka has halted sales of non-essential motor gasoline as the country faces its worst economic crisis in decades. For the next two weeks, only buses, trains, and vehicles used for medical services and food transport will be permitted to refuel.
Urban schools were closed, and officials have advised the country’s 22 million residents to work from home. The South Asian country is negotiating a bailout agreement as it struggles to pay for imports such as petroleum and food.
According to Nathan Piper, head of oil and gas research at Investec, Sri Lanka is the first country to take the severe step of banning fuel sales to ordinary people “since the 1970s oil crisis, when petrol was rationed in the US and Europe and speed limits were enforced to cut demand.”
He stated that the embargo highlighted Sri Lanka’s sharp surge in oil prices and inadequate foreign cash reserves.
Many island people are unsure how they will survive without fuel. Long lines have formed at fueling stations across Sri Lanka in recent months.
Chinthaka Kumara, a 29-year-old Colombo taxi driver, believed the prohibition would “cause more problems for people.”
“I’m a daily wage earner. I’ve been in this queue for three days and I don’t know when we will get petrol,” he said.
A Sri Lankan security guard keeps vigil outside a Colombo petrol station.
Drivers have been ordered to return home, and tokens have been handed to ration dwindling fuel inventories. Some people could keep queuing, but others couldn’t.
“I was in a queue for two days. I got a token – number 11 – but I don’t know when I will get fuel,” S Wijetunga, a 52-year-old private sector executive, told the BBC.
“I need to go to the office now, so I have no option but to leave my vehicle here and go in a three-wheeler.”
With its economy battered by the pandemic, rising energy prices, and populist tax cuts, Sri Lanka lacks sufficient foreign currency to pay for basic goods imports.
Acute fuel, food, and medical shortages have contributed to record-high living costs in the country, where many people rely on motor vehicles for a wage.
The government said on Monday that private vehicles will be prohibited from purchasing gasoline and fuel until July 10.
Bandula Gunewardena, a Cabinet spokesperson, stated that Sri Lanka has “never encountered such a serious economic crisis in its history.”
In order to ensure inexpensive oil supplies, the cash-strapped nation has also dispatched officials to major energy producers Russia and Qatar.
Officials said over the weekend that the country only possessed 9,000 tonnes of diesel and 6,000 tonnes of gasoline to fuel key services in the coming days.
Under normal conditions, the stocks are expected to last less than a week.
“We are doing everything we can to get new stocks, but we don’t know when that will be,” power and energy minister Kanchana Wijesekera told reporters on Sunday.
According to Alex Holmes, a senior economist at Oxford Economics, the gasoline limitations are “yet another minor symptom of a deepening crisis.”
“Mobility appears to have already been severely limited, given that people were waiting in [long] queues for fuel. But the complete ban for private vehicles goes one step further and will compound the economic pain,” he added.
In Colombo, a guy bearing bread loaves on a stave protests among others outside the president’s office.
For the first time in its history, the government defaulted on its debts to international lenders in May. Protests against President Gotabaya Rajapaksa’s government had raged for weeks. His brother, Mahinda, resigned as prime minister, but the president remains under pressure to step down.
A delegation from the International Monetary Fund arrived in Sri Lanka last week to negotiate a $3 billion bailout package.
The administration is also looking for help from India and China to import necessary commodities.
Earlier this month, new Prime Minister Ranil Wickremesinghe stated that the country would require at least $5 billion over the next six months to pay for necessities such as food, fuel, and fertiliser.
Ministers have also urged on farmers to grow more rice and offered government employees an extra day off a week to cultivate food in recent weeks, amid fears of a food shortage.
The administration blames the situation on the Covid pandemic, which harmed Sri Lanka’s tourist industry, which is one of the country’s largest foreign currency earners.
However, many analysts believe that mismanagement is the primary reason of the economic downturn.
Sri Lanka’s foreign currency reserves were nearly depleted following years of importing far more than exporting and incurring massive debts with China on contentious development projects.
When foreign currency shortages in Sri Lanka became a severe problem in early 2021, the government attempted to control the outflow by prohibiting the importation of chemical fertiliser and instructing farmers to utilise locally obtained organic fertiliser instead.
As a result, many crops failed. Sri Lanka had to import food, which exacerbated the country’s foreign cash shortfall.
(Adapted from Scroll.com)