Sri Lanka runs out of gas as currency crisis deepens

People block a main road as they wait for gas trucks to arrive at the station to distribute them, amid the country’s economic crisis in Colombo, Sri Lanka May 8, 2022. REUTERS/Dinuka Liyanawatte/File Photo

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People block a main road as they wait for gas trucks to arrive at the station to distribute them, amid the country’s economic crisis in Colombo, Sri Lanka May 8, 2022. REUTERS/Dinuka Liyanawatte/File Photo

Sri Lankan energy companies said on Monday they were running out of stocks of liquefied petroleum gas mostly used in cooking as foreign exchange shortages put renewed pressure on the island nation.

Hit hard by the pandemic, rising oil prices and tax cuts by the populist government of President Gotabaya Rajapaksa, Sri Lanka has just $50 million in usable foreign exchange reserves, it said last week. Finance Minister Ali Sabry.

Shortages of fuel, which is mostly imported, food and medicine have led to more than a month of mostly peaceful anti-government protests, although Rajapaksa on Friday declared a state of emergency for the second time in five weeks .

Chairman of state-owned Litro Gas, Vijitha Herath, told Reuters Sri Lanka’s currency crisis was causing a severe gas shortage as the company struggled to find sufficient dollars for payments.

“With the president’s involvement, we will get $7 million from the central bank to pay for a shipment of 3,500 metric tons (MT), which is expected to arrive on Tuesday,” he said.

Sri Lanka needs at least 40,000 MT per month for gas, which at current prices costs about $40 million.

Long queues for cooking gas seen in recent days have often turned into impromptu protests as frustrated consumers block roads.

The second player in the Sri Lankan duopoly, Laugfs Gas, has less than 2,000 MT of gas, reserved for industries and hospitals. The company is also struggling to find dollars and is currently in talks to use its overseas assets to open letters of credit.

“We are a bankrupt nation. The banks don’t have enough dollars to open lines of credit for us and we can’t go to the black market. We are struggling to keep our businesses afloat,” the Laugfs chairman said. , WHK Wegapitiya.

He estimated it would take the company at least another week to secure a gas delivery.

Several hundred ruling party supporters gathered outside Prime Minister Mahinda Rajapaksa’s official residence on Monday, after reports in local media said he may resign to ease pressure on the president, who is his younger brother. .

“Whose Power? Mahinda’s Power!” they shouted as the gates to the compound opened to allow them in.

Sri Lanka has approached the International Monetary Fund for a bailout and will begin a virtual summit on Monday with officials from the multilateral lender aimed at securing emergency aid.