Sri Lanka’s fuel distributors now owe the island nation more in penalties than the country previously paid in demurrage charges, according to State Energy Minister D V Chanaka. This shift follows the government’s implementation of stricter penalties after the economic crisis.
Demurrage Woes: During the economic crisis, Sri Lanka’s lack of foreign currency led to delays in fuel unloading, incurring millions of dollars in demurrage fees, which can reach $30,000 per day.
Penalties Bite Back: To address these delays, President Ranil Wickremesinghe’s government introduced a $50,000 daily penalty on distributors failing to unload fuel on time. This stricter measure has resulted in $13 million in penalties collected from distributors as of last year, significantly exceeding the $7 million in demurrage fees paid over the past two years.
Legal Wrangling and Future Outlook: While the legal process regarding these penalties is ongoing, the government explores the possibility of offsetting them against remaining demurrage costs. Minister Chanaka expressed optimism about receiving additional funds if this process succeeds.
Fuel Security Efforts: Currently, Sri Lanka maintains a $200 million fuel stockpile, sufficient for one week, along with $200 million in foreign reserves. These penalties were implemented last year as part of the country’s efforts to rebuild its fuel and financial resources.