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Energy supplies are crashing: What must Sri Lanka do?
According to Kpler, a global business intelligence company, seaborne crude and condensate exports were down 6.9 million bpd in March compared to the previous month, and are down another 1.8 million bpd through 20 April. This leads to the conclusion that loadings are likely to be down 8.8 million bpd from prewar levels. If no miracles occur in the remaining days of April, then crude and condensate exports will be about the same as the lows last seen during the COVID-19 pandemic in June 2020. Most Governments and companies are making plans for the continuation of this trend for months, in light of the erratic policies of the Trump Administration. Even after the blockades of the Hormuz Strait are lifted, supplies will be constrained. The stocks that were drawn down from storage will have to be replenished, creating an additional demand for 1.8 million bpd beyond the baseline prewar baseline. That means tight supplies for months longer as larger and richer countries stock up. Small countries will be at the back of the queue. Is our Government seeing this reality? Is it making plans and getting ready to execute them?Even if supply is constrained and what is available is very expensive, as evidenced by what Ceypetco recently paid for diesel, our economy must continue to function. That means the people need to have food and that supply chains, both domestic and export, must be safeguarded. That means a focus on diesel. Logistics supply chains rely on diesel, the supply of which is most affected. The Persian Gulf produces grades of medium-sour crude oil best suited for the production of middle distillates, such as jet fuel and diesel. As the war continues, supplies of these refined products, especially diesel, are becoming tighter; US diesel prices have already reached record highs, even though the US is no longer an oil importer, overall. It is important to distinguish between availability and affordability problems. If energy inputs are unavailable, the dependent economic activities will cease. If available but at higher prices, the consequences will depend on whether or not the costs can be passed through. If there is no fuel, domestic supply chains, such as those for tea (plucked leaves to factory, processed tea to the auction and to the port), will break. If the tourists cannot get to the hotel or visit attractions, tourism will falter. The affordability of fuel will be affected if export earnings decline and the rupee slides. To reserve diesel for priority p...
Sri Lanka Economy: JVP/NPP First Year Performance Review
Sri Lanka's economy demonstrated notable resilience during the first year of the JVP/NPP government, achieving a 5 percent growth rate while maintaining inflation at manageable levels. This performance marks a significant turnaround from the country's previous economic challenges, offering cautious optimism for the island nation's financial recovery trajectory. Key Economic Indicators Show Positive Trends The Sri Lankan economy's 5 percent growth in the JVP/NPP government's inaugural year represents a substantial achievement given the country's recent economic turbulence. Alongside this growth, inflation remained controlled at 5 percent, demonstrating effective monetary policy management and price stability measures implemented by the new administration. Foreign reserves experienced a notable increase, reaching US$ 6.1 billion, which includes a Chinese yuan swap facility equivalent to US$ 1.5 billion. This reserve accumulation strengthens Sri Lanka's external position and provides greater buffer against potential economic shocks, marking a crucial step toward financial stability. Monetary Policy and Inflation Control The maintenance of 5 percent inflation during the JVP/NPP's first year reflects disciplined monetary policy implementation. This controlled inflation environment supports consumer purchasing power while creating favorable conditions for business investment and economic expansion. The government's ability to balance growth with price stability demonstrates competent economic management during a critical transition period. Central bank policies under the new administration have focused on maintaining currency stability while supporting domestic economic activity. The strategic approach to monetary policy has contributed significantly to the overall economic performance and investor confidence restoration. Foreign Exchange and Reserve Management The increase in foreign reserves to US$ 6.1 billion represents a critical milestone for Sri Lanka's economic recovery. The inclusion of the Chinese yuan swap facility highlights the country's diversified approach to reserve management and international financial partnerships. This reserve buildup enhances Sri Lanka's ability to meet external obligations and supports currency stability. Improved reserve levels also strengthen the country's negotiating position with international creditors and multilateral institutions, potentially facilitating better terms for future financial arrangements and deb...
Procurement cuts, rising burn rates and shipment delays deepen energy ...
Coal crisis far worse than first feared Sri Lanka's coal supply crisis is significantly deeper than previously understood, with senior engineers and energy analysts warning that a dangerous combination of reduced procurement volumes, rising coal consumption and shipment delays could place national power generation at serious risk.
Sri Lanka Shifts to RMB Payment for Russian Oil Imports
Sri Lanka's energy sector plans to import Russian crude oil using Chinese Yuan (RMB) for payment, bypassing the US Dollar amid economic pressure. Sri Lanka's energy sector has announced plans to import Russian crude oil and settle the trade using Chinese Yuan (RMB), marking a practical step away from the US Dollar in regional energy trade.
