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Energy security: Part payments made for fuel shipments

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The Government has made part payments for two fuel shipments expected to arrive in Sri Lanka between 11-15 and 22-23 July.

The two consignments are for a 40,000 MT diesel shipment from a Ceylon Petroleum Corporation (CPC) supplier, scheduled to arrive between July 11 and 15, and a 35,300 MT petrol shipment ordered from the Indian Oil Corporation (IOC) under a Government-to-Government agreement, scheduled to arrive on July 22.

On the condition of anonymity, a senior government official close to the fuel procurement process told that a 30% advance payment had been made for the diesel shipment and a 50% advance payment had been made for the petrol shipment.

Payment terms for another consignment of diesel from IOC, which is expected to arrive between the 15th and 17th of this month, are being discussed, according to the official. He refused to reveal the value of the consignments.

Over the last six months, Sri Lanka has struggled to open Letters of Credit (LCs) to import fuel and other essential items, with many suppliers now seeking better advance payment terms or third-party guarantees for State bank credit facilities.

“Some CPC suppliers are now requesting a 110 percent advance payment, with the remainder refunded when the consignment is discharged.” “The CPC owes them a significant sum of money, and they are concerned about our ability to pay,” the official explained.

Another consignment of 50,000 MT petrol, on order from a CPC supplier and expected to arrive between 8-11 July, requires payment before delivery schedules can be confirmed, according to the official. Another shipment of 40,000 MT of diesel, scheduled to arrive between August 8 and 9, remains unconfirmed due to the CPC’s failure to pay.

According to the official, the 50,000 MT consignment of petrol expected between July 8 and July 11 may arrive on two smaller vessels.

Sri Lanka is running low on all fuel types, particularly petrol, with the State-owned CPC now only distributing fuel for essential services.

Following a request from the government, the Lanka Indian Oil Corporation (LIOC) will transfer 7,500 MT of diesel to CPC this weekend. Payments for the transfer have been made, according to the official.

The CPC has confirmed a shipment of 35,000 MT of fuel oil, adding that payment will be made upon arrival. The fuel oil shipment is scheduled to arrive in Sri Lanka on July 14-15. A consignment of light crude oil for the Sapugaskanda Oil Refinery is also being discussed.

Another three LIOC shipments, two gasoline and one diesel, are scheduled for the end of this month and early August. However, the terms of the consignments are still being negotiated, so delivery dates have yet to be confirmed, according to the official.

Several attempts to contact Minister of Power and Energy Kanchana Wijesekera, who has just returned from a trip to Qatar, Ministry Secretary Mapa Pathirana, and CPC Chairman Mohamed Uvais about the fuel import plans and details were unsuccessful.

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