Sri Lankan refinery shuts again after further payment problems
Quantum Commodity Intelligence - Sri Lanka has once again closed its only oil refinery in Sapugaskanda, with the crisis-hit country unable to raise funds to pay for crude oil, government officials said.
Minister of Power & Energy Kanchana Wijesekera told parliament that refined products lost due to the closure would be imported as finished products until enough foreign exchange is issued to clear the next crude shipment anchored off Colombo for the last 10 days.
Wijesekera also confirmed on social media the ongoing problems impacting the refinery.
"A shortage of Forex for payment of 2 Urals Crude Cargos already used at the refinery has led to the decision to close down the refinery. As soon as adequate Forex is availabile to CPC the 100,000 MT ESPO Crude Oil Cargo in SL waters for the last 10 days will be unloaded," he said on Twitter.
Before the crisis, Sri Lanka consumed over 100,000 bpd of oil products, whereas the refinery typically only processes 35,000 bpd, albeit with a potential capacity of 50,000 bpd.
Meanwhile, Sri Lanka's Business Times reported at least one oil supplier has threatened to cancel the fuel supply contract if Sri Lankan authorities fail to pay its balance payment, further exacerbating the crippling fuel crisis in the country.
Leading energy trading firm BB Energy has informed the state-run Ceylon Petroleum Corporation (CPC) that they have the right to cancel the fuel supply contract owing to the non-payment of their due amount as per its provisional invoice for 280,000 barrels of gas oil within 14 days following the arrival of their shipment.
The cash-strapped government is struggling to raise $587 million to pay for several fuel shipments, with Sri Lanka facing another severe fuel crisis after the government delayed payments for shipments already anchored at Colombo and several other shipments on their way to the port, informed sources said.
CPC unloaded a diesel consignment on 14 September. A 37,000 mt 92 RON gasoline and 100,000 mt crude oil cargo will have to be unloaded as the suppliers are awaiting payment, a senior energy official told Business Times.
According to the message sent by BB Energy to CPC, they should be paid 2% more than the amount quoted in the provisional invoice and, if CPC fails to do so, the company will unilaterally cancel the contract and divert the vessel to another discharge port.
The company is making this demand after receiving 10% of the quoted amount in the provisional invoice, the senior official said, adding that the government is grappling to ease fuel shortage under such difficult conditions.
