Sri Lanka extends school shutdown with country on brink of running out of fuel

Cash-strapped Sri Lanka has extended school closures for another week due to the crippling fuel crisis that has made it difficult for students and teachers to get to classrooms.

The education ministry on Sunday urged schools to conduct online classes, adding that the time lost during the holiday week would be adjusted in the next school vacation term.

The island nation of 22 million people is battling its worst financial crisis since its independence in 1948 due to mounting debt and dwindling foreign reserves. The dearth of funds to buy fuel and food over the past three months has pushed its citizens towards poverty.

The Sri Lankan government had earlier in June shut down all schools for a week and urged employees to work from home in an effort to save on fuel. Officials last week suspended the sale of fuel for non-essential vehicles to use available stocks to run ambulances, buses, trains and to distribute food.

The lack of fuel supply to power generating stations has forced authorities to announce nationwide power cuts of up to three hours a day starting from Monday.

Videos shared on social media showed serpentine queues of people awaiting their turn to fill up their tanks. In another video, an army officer was seen kicking a man after a group of men allegedly created a ruckus at a petrol filling shed, local media reported.

Power and energy minister Kanchana Wijesekera over the weekend said new fuel shipments were in the pipeline but the country is struggling to raise enough funds to pay as the central bank can supply only $125m (£102.8m). The country needs an estimated $587m to pay for about half a dozen fuel shipments.

“Finding money is a challenge. It’s a huge challenge,” Mr Wijesekera told reporters.

According to the minister, the first ship with 40,000 metric tons of diesel is expected to arrive this Friday, while the first ship carrying gasoline is expected to reach the shore by 22 July.

“This week, we will need $316m to pay for new shipments. If we add two crude oil shipments this amount shoots up to $587m,” Mr Wijesekera told reporters in Colombo. He added that Sri Lanka owed about $800m to seven fuel suppliers.

Sri Lanka has received most of its fuel via a $500m Indian credit line, which ran out in mid-June. The country is now negotiating with suppliers in Russia and Malaysia.

The government has urged nearly two million Sri Lankans working abroad to send their foreign exchange earnings home through banks. Mr Wijesekera said the workers’ remittances, which is the nation's primary foreign exchange earner, had declined to $318m in June from the usual $600m.

The remittances dropped from $2.8bn in the first six months of 2021 to $1.3bn in the same period for 2022, according to the Central Bank.

Ranil Wickremesinghe, who took over as prime minister in May amid ongoing protests against president Gotabaya Rajapaksa, announced in June that the nation’s economy has “completely collapsed”.

Warning that Sri Lankan is “facing a far more serious situation”, Mr Wickremesinghe added: “We are now seeing signs of a possible fall to rock bottom.”

Sri Lanka suspended repayment of about $7bn in foreign loans due this year out of $25bn to be repaid by 2026. The country’s total foreign debt stands at $51bn.

Meanwhile, officials will continue to hold talks with the International Monetary Fund for a possible $3bn bailout package.

Additional reporting by agencies