As Economic Crisis Worsens, Sri Lanka Imposes Nationwide Power Cuts On 'Rotational' Basis

From staring at bankruptcy this year, asking expats to send home money for help and the prices of used cars costing more than luxury flat, it's all happening in Sri Lanka.

Amidst the economic crisis that keeps on deepening with each passing day, the Sri Lankan govt is taking desperate measures for survival.

One such step taken by authorities to tackle the deepening financial crisis that has led to shortages of fuel and handicapped its power grid, is the imposition of rolling power cuts across our neighboring island nation, as per Aljazeera.

Reuters

This rotational power cut announcement comes even as Sri Lanka paid $35 million for a diesel shipment yesterday, as per a Reuters report, and has another large payment due this week.

Sri Lanka¡¯s Public Utilities Commission has reportedly said that it will shut off the country¡¯s power grid for four and a half hours on Wednesday after two hours of power cuts already on Monday and Tuesday.

According to officials, electricity will be switched off on a rotating basis amongst regions, between 8:30am and 10:30pm, as reported in Aljazeera.

The regulatory body also said that the state-owned Ceylon Electricity Board had requested permission for the cuts as fuel shortages have already caused the loss of about 700 MW to the national grid.

Over the last few weeks, Sri Lankans have experienced several sporadic power failures as well.

But the utilities commission chairman Janaka Ratnayake clarified that we are having a fuel crisis not an electricity crisis.

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Reasons Behind The Crisis

The Covid pandemic has dealt a massive blow to Sri Lanka¡¯s economy that depends heavily on tourism and trade, with the government estimating a loss of $14bn in the last 2 years.

Consequently, depleted foreign reserves have been driving Sri Lanka towards its worst economic crisis in decades. The currency crunch has hindered imports of fuel and other essentials from overseas, including milk powder, cooking gas and petrol.

Even in the past few days, many Sri Lankans have been forced to wait in long queues in the capital of Colombo and its suburbs to obtain fuel for their motorbikes and vehicles. And that¡¯s not all. Some fuel stations remained closed as they have not received new supplies.

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Over $7Billion Of Foreign Debt

To make things go bad to worse, Sri Lanka has piled up huge debt, as it borrowed heavily and now faces repayments on $12.5bn in international sovereign bonds.

According to Sri Lanka¡¯s central bank, the government settled $500m due on sovereign bonds in January 2022 and the gross official reserves stood at $2.36bn at the end of that month.

But even after including the latest payment, Sri Lanka has foreign debt obligations exceeding $7bn in 2022, including the repayment of another bond worth $1bn in July 2022.

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