Sri Lanka runs out of fuel: What happens when a country has no energy?

Debt-laden Sri Lanka has run out of fuel for the first time bringing the country to a grinding halt. Not a drop of oil remains for the public and whatever little reserves the nation of 22 million has will be used to keep essential services going. All non-essential services have been suspended till July 10.

Struggling to import even basic necessities like fuel, food, and medicines, the country, which does not have any foreign exchange to finance its purchases, is seeking international handouts. The International Monetary Fund is currently in the country to discuss a bailout package.

Shipments of oil that were to arrive last week have not reached due to “banking reasons”. Sri Lankan energy minister said there is no clarity on new shipments. Most suppliers are renegading on shipments citing non-commitment of payments and logistic issues.

For the next several days, only health, law and order, ports, airport, food distribution, and agriculture will function in the island nation. Schools have been shut, all private offices must work from home, and government offices must also work from home as far as possible.

A token system will be used to distribute fuel as the government aims to use what it has left judiciously. The tokens are supposed to hold the place for people who are lining up for fuel at pumping stations - many of them have been there for days. The government has urged people not to line up outside fuel pumps but autorickshaw drivers whose livelihoods depend on it are keeping the exhausting vigil in hope of relief.

There is scarce public transport on the roads and the cost of running private vehicles amid the fuel crunch is exorbitantly high - diesel is retailing at 460 Lankan rupee and petrol is retailing at 550 per litre.

Scheduled power cuts in Sri Lanka will rise to three hours from two and a half hours earlier.

What fuels a country?

Oil and other fossil fuels are vital for the economic life of a country.

In a fossil fuel-dominated world, almost everything depends on a steady supply of oil. So, even as vehicular traffic comes to a standstill in Sri Lanka, its industries are also sputtering. Food, clothes, computers, and pharmaceuticals, all directly or indirectly require fossil fuels for their production or transportation. Natural gas is needed for manufacturing fertilizers that are necessary for agriculture, the backbone of many emerging economies. Large farm equipment are fuel guzzlers. To deliver essentials to people, logistics chains need to be well-oiled too.

So, uncertainty over fuel would prompt the administration to take drastic measures and these can deal a blow to people whose livelihoods depend on daily wages.

Options for Sri Lanka

Completely run out of foreign exchange to buy crude oil from abroad as also after exhausting the emergency line of credit worth US$ 700 million granted by India, a desperate Sri Lanka decided to allow companies from oil-producing countries to import and sell fuel thus changing its policy of duopoly in fuel sale. However, there is the problem of exchanging the Sri Lankan rupee into foreign currency by retailers coming from abroad. Colombo has no forex reserve to convert.

The island nation sent ministers to Qatar in search of oil. Also, a desperate ministerial outreach is planned for oil from Russia. While the stock of petrol and diesel left with the island is less than enough to meet essential services what Sri Lanka needs is some oil tankers to berth in its ports. The local unit of Indian Oil Corporation is expecting to provide 30,000 tonnes of petrol and diesel, reported the news agency Reuters. India, too, imports crude and cannot fund Colombo indefinitely.

The world cannot just stare at Sri Lanka and provide lip service. It is time for action. Given the global shortage of crude, it is time to introspect and sort out conflicts so that island nations like Sri Lanka do not starve.