The fuel crisis

Like Sri Lanka, India is also facing a fuel crisis. However, some Indian economic experts had analysed the situation and expressed an opinion, which is applicable to Sri Lanka as well.

In 1970 America insisted that all petroleum (crude oil) dealings should be in US dollars. Several countries purchased excess US sdollar to be kept in reserve. Whenever the US dollar is strong, these countries which deal in US dollars faced price increases and adverse economic conditions.

Late Saddam Hussein objected to this and wanted to deal in the euro. However, America had suppressed this action. Now Iran is breaking this US dollar linkage and is prepared to deal in euros. Further, it is reported that Iran is prepared to sell fuel to India based on the Indian rupee, and America had advised India not to deal with Iran. This is considered interference in the sovereignty of India, which should be free to deal with any country.It appears that Iran was prepared to sell natural petroleum gas to India. It could be transmitted via pipelines and even other countries like Afghanistan, Pakistan and Sri Lanka could join in this deal. America did not approve of this contract either.

It is high time for India/Sri Lanka to revise economic policies without being influenced by America. The fuel crisis is a major problem to our country and we should take steps to resolve the same. The following steps are suggested:

Dealing in euros and if possible based on Sri Lankan Rupees. Consider purchase of natural petrol gas from Arab countries (Iran) by having a joint venture deal with India.

Reduce the balance of payment deficit.

There are foreign   investors who have credit trading, currency trading and share market participation with Sri Lanka. Regrettably some investors take away all their investments immediately on facing adverse economic problems which make matters worse. Several foreign countries have nearly collapsed due to this attitude of foreign investors. This action should be controlled by the Central Bank of Sri Lanka like India, which had taken constructive measures.

Explore the possibilities of crude oil excavation in our county. We should not sell this contract to foreign or local private organisations.Whilst admitting to not being an economic expert, I urge economic intellectuals to express their opinion for constructive action to improve our economy.

S.R. Balachandran

B.Sc., FCA. FCMA. (Sri Lanka)