Will Sri Lanka’s economic crisis affect me as a tourist? (Update 21.10.2022)

The paradise island of Sri Lanka depends heavily on tourism and is currently facing an economic crisis. While the road to recovery is long and has affected the tourist industry, you can still have a great holiday traveling here.

As we are in the tuktuk rental business, tourists and fuel are essential to our operations. Therefore, we monitor the situation closely and share updated information here.

Understanding the Fuel Situation

The economic crisis created a shortage of money to buy fuel. This led to shortages, closed stations, and long queues. You probably saw news images of these queues earlier this year. However, the situation has improved significantly. In August, the government introduced a QR Code Fuel Pass system to manage distribution with a weekly quota.

Initial Fuel Shortages and Queues

News reports have highlighted long queues at petrol stations across Sri Lanka. This issue first appeared in local news back in February and March. When the news spread, it caused a massive rush to fuel stations. Naturally, everyone wanted to fill up before the supply ran out. This rush created even longer queues and made the fuel run out faster, causing temporary shortages.

It’s also good to know that fuel stations are often busy, even outside the crisis. This is especially true in the densely populated western and southern parts of the island.

How the Situation Improved for Tourists

Petrol is the main concern for tourists renting a tuktuk. Initially, our customers had little trouble finding it. While Kandy experienced a petrol shortage for a couple of weeks in April, authorities have largely solved that issue. Thankfully, petrol availability is getting better every day. We see a steady supply of fuel shipments arriving in the country.

Distribution tends to prioritize densely populated areas like Colombo, Kandy, and Galle. These areas have the most petrol vehicles. Conversely, outer suburbs currently receive petrol more slowly. This means you might have a better chance of finding fuel in the less crowded areas where you’ll likely be traveling.

Impact of Power Cuts on Fuel Access

Power cuts can also affect fuel availability. When the power is out, the electrical pumps at fuel stations don’t work, forcing them to close temporarily. This can lead to longer lines once power returns. While this was a frequent problem during the initial diesel shortage, it happens much less now.

How to Get Fuel as a Tourist

The Tourist Fuel Pass Card

The Tourist Fuel Pass Card is a special top-up card for foreign currency. It allows tourists to get unlimited fuel and priority access at stations when self-driving a tuktuk. The Ministry of Power and Energy, the Ministry of Tourism, Dialog, and Sampath Bank launched this card to help tourists get fuel quickly.

Special Access and Local Help

 

On special days, often Fridays, Ceypetco distributes fuel to Essential Services. This includes doctors, police, and religious leaders. Because the Ministry of Tourism declared Tourism an Essential Service, tourists can often fuel up here as well. If you see a station providing fuel for essential services, check with the police or army present if you can get fuel.

Lanka IOC has been a stable petrol provider, refilling their stations every few days. The recent partnership with Lanka IOC to build new storage tanks will help provide fuel more sufficiently.

 

The Friendly Sri Lankan People

 

As Sri Lanka depends on tourism, many people are willing to help. Our customers have shared amazing stories. For example, people in queues insisted they go first, police let them pass queues, and fuel station managers asked them to come forward.

In addition, hotel owners might have extra fuel stored or can send someone to get it for you. The hospitality of the people towards tourists during this crisis has been incredible. Once you book accommodation, you can call ahead and ask them to secure some fuel for you. Everyone understands that tourists bring valuable foreign currency to the country.

Foreign currency crisis in Sri Lanka and its effects on the economy

The Economic Crisis and Its Effects

 

What caused this situation? For some time, Sri Lanka has faced issues with its foreign currency reserves, like Euros and US Dollars. Events like the 2019 Easter attacks and the COVID-19 pandemic reduced the flow of foreign money into the country. Sri Lanka needs this foreign currency to buy essential and luxury goods from overseas.

For example, the government banned vehicle imports in 2020, which includes tuktuks. This resulted in a thriving second-hand market. A tuktuk that cost 1 million LKR in 2020 now costs a whopping 1.6 million rupees. Similarly, a lack of spare part imports has increased prices for tuktuk repairs. Despite these rising costs, we continue to offer our product at the same rates to tourists while raising the rates we pay our tuktuk owners.

 

Rupee Depreciation

 

The value of the Sri Lankan rupee is declining rapidly. As a result, your Euros and US dollars are worth much more in the country!

 

Fuel Prices

 

Due to the economic situation, fuel prices have increased. Before this scares you, let’s look at what this means for you as a tourist. Compared to most western countries where fuel is around the $2/€ mark, petrol is still super cheap in Sri Lanka. However, there is a lively black market, and sourcing fuel from other companies can be more expensive, with prices sometimes reaching $5 or $6 per litre.

Food Prices

 

Currently, there is no shortage of food, but prices have increased. Still, food remains very cheap, especially if you’re coming from the West. The government is working on alternative ways to ensure the food supply remains stable.

 

Power Cuts

 

The foreign currency shortage limits diesel and coal imports. This impacts how much electricity fossil fuel plants can produce. As a result, you may experience power cuts for 3 to 4 hours, spread throughout the day.

Will this affect you? Yes, but it likely won’t ruin your experience. Based on our customers’ feedback, most people are out exploring during the day. You’re visiting sights, driving your tuktuk, and enjoying the country. You don’t really need electricity for climbing Sigiriya Rock or surfing in Hiriketiya. Nighttime power cuts can be annoying if your hotel lacks a generator, but they don’t last forever. Power cuts in the evening can even lead to a memorable candlelight dinner.

We recommend bringing a power bank to charge your phone and a headlight or torch. Most larger hotels and restaurants have a generator anyway.

Understanding the Protests

 

The economic situation deeply affects the local population. They suffer from rising prices and power cuts that prevent them from working. A lack of diesel also impacts bus services. Understandably, people are frustrated. They have taken to the streets to protest and demand the government take action or step down. The protests mainly occur in Colombo, near political headquarters, and occasionally in other cities.

 

Tourist Safety During Protests

 

From my many years living in Sri Lanka, I’ve learned that protests rarely affect tourist areas. I don’t expect unrest in places like Mirissa, Ella, Arugam Bay, or Unawatuna. The country has always protected tourists from civil unrest, so you do not need to be afraid. In the unlikely event you encounter a protest, you will likely just hear the local population’s complaints without being affected directly.

News on the ground from our customers is that things are very quiet in the north and east. There are no protests, and everyone is going about their lives. This part of the island is in season, with beautiful beaches around Trincomalee and great surf near Arugam Bay.

Why you should keep travelling to Sri Lanka!

Ultimately, issues like power cuts, fuel shortages, or protests have occasionally occurred in Sri Lanka. Locals and tourists alike learn to adapt. While fuel is currently harder to find, we expect the situation to improve daily.

The island depends on tourism for its foreign income. If tourists can’t travel, the country won’t make the money it needs to buy more fuel. Therefore, the government will do everything in its power to support tourism.

So if you have doubts about your travel plans, my advice is to please come to Sri Lanka. Now, more than ever, our island needs tourists. Sri Lanka is in an economic crisis because of a foreign currency problem, and a solution to this problem is YOU!

Future

The government has started talks with the IMF and initiated a law firm to represent them. These are promising signs that will result in drastic economic restructuring. This means money from the IMF will come in, ensuring fuel, electricity, and food imports. Unfortunately, this will also mean a continuation of rising prices and higher taxes. However, this will barely affect you as a tourist, as prices will still be cheap compared to back home.

More information about renting a tuktuk in Sri Lanka: https://tuktukrental.com/initial-info

Book your tuktuk now: www.tuktukrental.com

Live Updates on Sri Lanka’s Economic Crisis

April 1st 2022 – Citizen-driven Protests Citizens planned protests in over 20 cities for April 3rd. On April 1st, President Gotabaya Rajapaksha declared a ‘Public Emergency’.

April 3rd 2022 – More Fuel for Electricity Energy & Power Ministry secretaries informed that they will provide sufficient fuel to CEB for power generation. Hence, power cuts will reduce considerably.

April 4th 2022 – Sri Lanka’s Entire Cabinet Resigns All Cabinet Ministers resigned from their portfolios, tendering their resignations to the Prime Minister. This signals an acknowledgement for change.

April 4th 2022 – Islandwide Protests People took to the streets all over the island for peaceful protests. We saw images of police joining protests while keeping the peace. This is a local issue, and it does not involve tourists.

April 6th 2022 – Things Have Calmed Down No news about protests, just political restructuring. The government appointed a new finance minister who resigned again. They also lifted the state of emergency.

April 12th to 17th 2022 The Sinhala/Tamil New Year holidays severely impacted fuel supply to stations. With many stations closed, people experienced long queues for petrol and diesel islandwide. From April 16th onwards, many of these issues have been resolved.

April 21st 2022 – Fuel Situation Update The long holiday period caused a distribution delay. Sri Lanka has already received a credit line via India and funds from China to purchase more fuel.

June 24th 2022 – Fuel, Price and Power Cut Updates The country is experiencing an island-wide fuel shortage and long queues. The country awaits a fuel consignment. Officials say fuel prices will increase. Power cuts have reduced to 2.5 hours a day.

June 26th 2022 – Tourism Revival The government delayed the latest fuel shipment arrival until July 10th. Officials have asked locals not to queue as available fuel will only go to essential services. The new Tourism Minister has set out revival plans, including allowing private companies to import fuel.

July 08th 2022 – Possible Good News About Fuel Shipments We have good news about possible fuel shipments arriving between the 10th-13th and 22nd-23rd of July. The president has also discussed obtaining fuel from Russia under a credit line.

July 11th 2022 – Country Situation and Fuel Update On July 9th, Sri Lankans gathered for mass protests, resulting in the President agreeing to resign on July 13th. LIOC resumed fuel distribution today.

July 12th 2022 – President Flees the Country The president has fled the country.

July 14th 2022 – Petrol is Coming! Ceylon Petroleum Company announced that a petrol shipment is arriving in Sri Lanka on July 17th.

July 15th 2022 – President Resigns After months of protests, the president has finally stepped down.

July 20th 2022 – New President Takes Office Following a Parliament election, the new President took the oath of office. The IMF has agreed to fast-track discussions for monetary aid.

July 21st 2022 – Launch of the National Fuel Pass Authorities introduced a new National Fuel Pass system to selected filling stations. Registered vehicles will receive a weekly fuel quota via a QR code. This system will not affect your travels.

July 29th 2022 – What’s New? The past week has been hopeful. Two fuel shipments arrived, making fuel availability much smoother. New shipments of Petrol 95 are arriving in mid-August.

August 10th 2022 – New Decisions for Tourists to Obtain Fuel The QR code system has taken stress off locals. Tourists can fill up without this QR code at many stations. The tourism Minister has brought forward a committee to introduce a new fueling method for tourists.

August 20th 2022 – New Fuel Shipments to Arrive! A crude oil shipment will arrive between August 23rd – 29th. This will help the Sapugaskanda oil refinery continue operations.

August 25th 2022 – Fuel Pass for Tourist Vehicles The government plans to introduce a new quota system for tourist vehicles as a fuel pass. They have not yet updated the procedural information.

September 9th 2022 – Fuel System for Tourists The Tourist Fuel Pass system will launch next week. You can buy a card at selected Sampath Bank branches, top it up with foreign currency, and use it at selected fuel stations islandwide.

October 21st 2022 – Fuel Pass Card is Now Available The wait is over. On October 5th, 2022, Sri Lanka introduced its first Fuel Pass Card at the Bandaranaike International Airport. We have a special blog post dedicated to it here.