State Minister of Power and Energy, D.V. Chanaka has expressed optimism for a decrease in global oil prices after March, despite the seasonal rise at present due to winter in Europe.
Addressing the media on Thursday (Feb 08), the State Minister said the government intends to utilize this anticipated price drop to benefit consumers.
He further announced a revenue generation of USD 3 million through the sale of 5,200 MT of fuel via the revived bunkering system for vessels, stating that this signifies a significant step forward in stabilizing the country’s energy finances.
D.V. Chanaka emphasized the establishment of a USD 200 million buffer stock. This prudent measure demonstrates proactive planning to mitigate future economic fluctuations and ensure energy security.
Acknowledging the past economic struggles, the State Minister referenced the time when Sri Lanka faced fuel shortages and long queues. However, he highlighted the nation’s gradual progress achieved through collective efforts. He commended everyone involved for their dedication, attributing the current stability in oil supply to their collaboration.
The State Minister proudly announced that Sri Lanka currently holds the largest oil reserves in its recent history, signifying a significant improvement in fuel security and preparedness. Additionally, he reassured the public about the maintenance of a balanced petroleum legal corporation dollar system, suggesting responsible financial management within the sector.
The Sri Lankan government is taking proactive measures to ensure energy security and navigate global oil price fluctuations, he said.
“Firstly, the government is building a USD 200 million buffer stock to safeguard against potential economic shocks. This demonstrates their commitment to future energy security. Additionally, they maintain a weekly supply of dollars to meet immediate needs, signifying responsible financial management.
“The current fuel stock exceeding 75,410 tons, encompassing various types of fuel for vehicles, aviation, and power generation, as 130,791 MT of Auto Diesel, 83,275 MT of Petrol 92, 8313 MT of Super Diesel, 11,196 MT of Petrol 95, 17,274 MT of Jet A1 used for aircraft and 17,274 MT of Fuel Oil (FO) for power generation. This achievement stems from securing long-term contracts through tender procedures, guaranteeing a steady supply for the next six months,” he said.
The State Minister also highlighted the elimination of late payment fees since 2023, achieved by strategically storing ships upon arrival and making timely purchases using available dollars.
“Overall, the Sri Lankan government’s proactive measures and understanding of global trends paint a positive picture for the country’s energy sector. They are focusing on financial stability, long-term fuel security, and seeking ways to alleviate the burden of fluctuating oil prices on consumers,” he said.
The State Minister of Power and Energy also outlined several positive developments in Sri Lanka’s oil procurement strategies, stating “Prior to 2023, Sri Lanka incurred annual late fees on oil purchases. However, a new system implemented last year stores arriving ships until payment is secured, eliminating these fees for the first time in 15 years. To further optimize pricing and reduce costs, the traditional tender method for oil procurement is being transitioned to an auction system. Nearly complete (95% implemented), this initiative leverages expertise from the oil storage terminal for effective execution.
“Sri Lanka is exploring new technologies to decrease procurement fees further. Additionally, the premium paid on oil has seen a significant reduction, dropping from 22% in 2022 to 5-3% in 2023.
“After a two-year gap, the bunkering system allowing ships to refuel was restarted in 2024. This generated USD 3 million in revenue by selling fuel oil used for electricity production. Plans are underway to expand this service by providing diesel to vessels soon,” he added. (NewsWire)
