Fuel shortage on the cards as private suppliers cut back

A fuel shortage could emerge if private distributors continue to restrict supplies amid higher international prices, fuel dealers have warned, as the Government moves to ensure minimum stocks and maintain supplies to the market.

Energy Minister Anura Karunathilaka told Parliament on Tuesday (6) that the Energy Ministry Secretary had instructed private fuel distributors to maintain minimum stocks in the country and ensure uninterrupted supplies.

The Minister said some private companies had reduced the volumes they released to the market after informing the Government that they were facing losses as international fuel prices rose while domestic prices remained comparatively lower.

The reduction in private-sector supplies had increased the burden on the Ceylon Petroleum Corporation (CPC), whose share of the diesel market had risen from about 54% to 82%, Karunathilaka said.

He said the CPC had increased its supplies to compensate for the reduction by private distributors and that further steps were being taken to ensure adequate supplies at CPC filling stations.

Karunathilaka said the Government could not, under existing agreements, direct private companies on the exact quantities they should supply individual filling stations. However, it could require them to maintain minimum fuel stocks in Sri Lanka.

He said instructions had already been issued to companies that had failed to maintain the required stocks.

The Minister attributed the queues reported at some filling stations to reduced supplies from private companies and normal fluctuations in distribution. He also said demand for CPC fuel had increased because private distributors generally did not provide fuel to dealers on credit, while the CPC offered a three-day credit facility.

“We expect that, as the Ceylon Petroleum Corporation takes on this additional burden, the problem will ease to some extent by Wednesday or Thursday,” Karunathilaka said.

A special discussion on the fuel supply situation is scheduled for Wedensday (7), with officials of the Energy Ministry and CPC expected to participate, along with President Anura Kumara Dissanayake.

Meanwhile, Petroleum Dealers’ Association Chairman D.V. Shantha Silva said queues had been reported at several filling stations due to reduced supplies.

He said the situation was linked to Lanka IOC, Sinopec and R.M. Parks reducing the frequency of their fuel orders amid losses arising from the current pricing structure.

The dealers’ association has warned that the situation could continue to affect fuel availability unless the issue is resolved.

The Ceylon Petroleum Private Tanker Owners Association, however, urged motorists to avoid panic buying, saying there was no nationwide shortage or disruption to fuel supplies.