Energy Ministry Secretary blames credit rating downgrades for fuel woes

The repeated downgrading of Sri Lanka’s credit ratings was one of the main reasons for the current fuel shortage, Secretary to the Ministry of Energy, K. D. R. Olga told the media yesterday.

She said this at a media briefing organised by the Presidential Media Centre under the theme ‘Energy to Strengthen the Country’.

She said that due to the downgrading of credit ratings had benefited the oil suppliers.

Olga said Sri Lanka would receive 177, 200 tonnes of diesel in March.

“The CPC earns in rupees but needs dollars to buy fuel. So, we buy fuel on credit and banks usually open letters of credit for 60, 90 and 180 days. When it’s time to pay, the CPC has to purchase dollars and in recent times we had trouble buying from the market,” she said.

The Energy Ministry Secretary said that in December 2021, after credit downgrades, suppliers started demanding payment for the fuel before the oil stocks were shipped;

“This landed us in trouble. We need to ensure the fuel security of the country. Some suppliers didn’t want to deal with us and those who want to ship want the money upfront. This demand became a problem for the banking system too. For example, the Central Bank has planned to spend USD 400 million per month on fuel, but with these demands the monthly expenditure rose to about USD 600 million. As you can imagine this caused a big problem for the banking system,” Olga said.