How Rational is Fuel Rationing?

0
507

The country is now in the midst of the most difficult three weeks in terms of fuel supplies.

Following Prime Minister Ranil Wickremesinghe’s warning about a coupon system, Power and Energy Minister Kanchana Wijesekara announced last Sunday that the Government has been forced to implement a quota system for fuel purchases beginning July. His excuse was that motorists were hoarding fuel. But, internal Government sources claimed that the real reason was the Government’s failure to finalise and secure fresh supplies.

“We have no choice but to register consumers at filling stations and give them a guaranteed weekly quota until we are able to strengthen the financial situation, restore 24-hour Power and a steady supply of fuel. I hope to have this system in place by the first week of July,” Minister Wijesekera tweeted.

This quota or rationing system is being implemented in the hope of managing the supply of fuel until there is an uninterrupted round-the-clock supply of electricity and fuel. Wijesekera hoped that imposing a fuel quota would go a long way towards addressing the crisis.

However, will the quota or rationing system be effective?

What is the fuel quota system and how will it work

Minister Wijesekara said that the quota system will be implemented in a methodical manner with customers being issued a ticket or ration card at the nearest fuel station. If the customer’s ration card allows for 100 litres of fuel, the nearest fuel station should provide 60 litres of fuel, with the remainder coming from other dual filling stations.

The ration card quantity will differ depending on the vehicle. The capacity will be changed most of the time.

However, Wijesekara said that the first week of the rationing system would be a pilot project that will be continued if it is successful.

When will the financial constraint be lifted?

Wijesekara said that due to financial constraints, the Ceylon Petroleum Corporation imports fuel to last a week, but some consumers stockpile fuel for a month or more for their machinery and generators.

He claimed that providing 24-hour power costs an additional USD 100 million per month for diesel, furnace oil, and naptha. The fuel shortage has increased demand for electricity and kerosene, and the monthly fuel bill, which was USD 200 million four months ago, is now USD 550 million.

However, Prime Minister Wickremesinghe claims that the Government has secured enough funds to ensure a four-months supply.

“We ran into a foreign currency issue while getting fuel. A State bank did not have rupees while discussing the issue. Then I got approval from the Cabinet to print money. This is why a new tax was implemented. Several other taxes will also be levied. Apart from the dollar crisis, Sri Lanka is experiencing a rupee shortage. All necessary measures will be taken to eliminate the rupee deficit by the end of this year,” he said.

Meanwhile, the last of the fuel shipments under the Indian Line of Credit is due to arrive in Sri Lanka later this month, with no indications of future supplies, which are dependent on India’s assistance, being sustained.

Sri Lanka spent USD 1.92 billion on fuel imports in the first four months of this year, up 38 per cent from the same period in 2021. Refined petroleum imports increased by 49.7 per cent to USD 1.55 billion, while coal shipments increased by 102 per cent to USD 256 million. Between January and March, fuel imports increased by 44.5 per cent to USD 1.4 billion. In terms of volume, refined petroleum and other imports fell 14 per cent to 1.18 million tonnes.

Every month, the country spends USD 500 million on fuel. He warned that the current global crisis could lead to an increase in oil prices. “Some predict that global oil prices will rise by up to 40 per cent by the end of this year. In this context, the introduction of a fuel coupon system cannot be ruled out. We must find USD 3,300 million for fuel for the next six months,” the Premier told Parliament.

Is the fuel quota system truly a last resort?

Despite the incumbent Power and Energy Minister’s claim that they have no other option but to implement a fuel rationing system, former Energy Minister Udaya Gammanpila has proposed ten solutions to the fuel crisis.

He emphasised that super or luxury vehicles that use a large amount of fuel should be temporarily banned in order to increase the flow of fuel to small and medium vehicles.

He proposed a ban on all cars and jeeps with engine capacities greater than 2000 CC in order to manage the current fuel crisis. He owns a 1500 CC vehicle.

“Some supercars obtain four to five kilometres per litre of fuel, while a three-wheeler achieves 25 to 30 kilometres. In other words, a luxury car’s fuel can only last a day, whereas a three-wheeler can last a week,” he explained.

Is a quota system really necessary?

Dissanayake, a scooter owner, expressed her appreciation for the quota system. “We prefer quotas than queues. However, we do not know if the quota system will result in longer fuel queues. We do not mind managing fuel for a week, but we cannot stand in the dark for hours on end. However, if the fuel crisis worsens and we continue to see longer lines, this rationing system will be another failed attempt by the Government,” she said.

Noyah, the owner of a food delivery bicycle, expressed his displeasure with fuel rationing. “What is the Government’s stand about us? Is it their intention for us to remain at home? We are the ones who go everywhere because it is our primary responsibility. We are already frustrated with the Government, and if they implement such rash plans without proper forecasting, the situation will deteriorate. We will have to leave the country, but that is also a costly process,” he explained.

Vithanage, the owner of a luxury vehicle, said that he is fine with whatever system is in place as long as corruption does not occur. “We actually have no idea how this will play out. What if fuel hoarding worsens as a result of this? What if people start getting multiple ration cards or duplicate them? Do ministers get ration cards as well?” he inquired.

By Thameenah Razeek