Sri Lanka suspends non-essential petrol sales for two weeks

Sri Lanka has decided to halt the sales of fuel for non-essential vehicles for two weeks, as it faces its worst economic crisis in decades.

Only buses, trains and vehicles used for medical services and transporting food will have the access to fuel, over the next two weeks.

Under present conditions of the country's economy, even schools in urban areas are closed, while 22 million residents have been directed to work from home.

Sri Lanka is in talks over a bailout deal as it struggles to pay for imports such as fuel and food, reports BBC.

Sri Lanka is the first country to take the drastic step in halting sales of fuel to ordinary people "since the 1970s oil crisis, when fuel was rationed in the US and Europe and speed limits introduced to reduce demand", Nathan Piper, head of oil and gas research at Investec, told the BBC.

Photo: BBC

He said the ban underlined the steep rise in oil pricing and limited foreign exchange reserves in Sri Lanka.

Many of the island's residents don't know how they will cope without fuel. There have been long queues at filling stations across Sri Lanka in recent months.

Chinthaka Kumara, a 29-year-old taxi driver in Colombo, thought the ban would "create 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 told BBC Sinhala.

Drivers have now been asked to go home, with tokens distributed aimed at rationing scarce fuel stocks. Some kept 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 an economy hit hard by the pandemic, rising energy prices and populist tax cuts, Sri Lanka lacks enough foreign currency to pay for imports of essential goods.

Acute shortages of fuel, food and medicines have helped to push the cost of living to record highs in the country, where many people rely on motor vehicles for their livelihoods.

On Monday, the government said it would ban private vehicles from buying petrol and diesel until 10 July.

Cabinet spokesperson Bandula Gunewardena said Sri Lanka had "never faced such a severe economic crisis in its history".

The cash-strapped country has also sent officials to the major energy producers Russia and Qatar in a bid to secure cheap oil supplies.

Over the weekend, officials said the country had only 9,000 tonnes of diesel and 6,000 tonnes of petrol to fuel essential services in the coming days.

It has been estimated that the stocks would last for less than a week under regular demand.

"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.

Alex Holmes, a senior economist at Oxford Economics, told the BBC the fuel restrictions were "yet another small sign of a worsening 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 recent weeks, ministers have also called on farmers to grow more rice and given government officials an extra day off a week to grow food, amid fears of a shortage.

The government blames the crisis on the Covid pandemic, which affected Sri Lanka's tourist trade - one of its biggest foreign currency earners.

But many experts say mismanagement is the main cause of the economic collapse.

Sri Lanka's foreign currency reserves dwindled to almost nothing after years during which it imported much more than it exported and racked up huge debts with China on controversial infrastructure projects.

When Sri Lanka's foreign currency shortages became a serious problem in early 2021, the government tried to limit the outflow by banning imports of chemical fertiliser, telling farmers to use locally sourced organic fertilisers instead.

This led to widespread crop failure. Sri Lanka had to supplement its food stocks from abroad, which made its foreign currency shortage even worse.