Diesel fuel rationed after STO shipment delayed

The State Trading Organisation (STO) has controlled the sale of diesel fuel in the Maldives due to a shipment delay.

The delay of diesel shipments occurs “sometimes during the year” when ships carrying diesel from Dubai are “held up” in port, STO Managing Director Shahid Ali told local media.

While diesel will be made available to the State Electric Company (STELCO), resorts and general customers, new orders for diesel are being controlled by STO, according to Ali.

“This is a common problem. But there is enough oil in stock for STELCO and all the resorts, who buy oil on a regular basis. It is only the sale of oil to other groups that has been controlled,” said Ali.

“We might not be able to meet the demand of a sudden order. But regular customers will have continued supply,” he added.

The diesel shipment will arrive on Wednesday (August 14) and STO expects the control of diesel to be lifted by Thursday, according to Ali. No restrictions on petrol supplies have been enacted.

Meanwhile, Fuel Supply Maldives has also restricted the sale of diesel, following STO’s control of diesel supplies, Managing Director of Fuel Supply Maldives Adam Saleem told local media.

“We have rationed the sale of diesel to resorts. We have faced this problem before as well, but this time the delay has been prolonged,” said Saleem.

Fisherman are also facing problems due to the limited diesel sales, while resorts are complaining about running out of diesel supplies, according to local media.

Diesel fuel is the primary source of power generation in the Maldives, with most islands having separate power house facilities. Marine diesel is also used to fuel the country’s fishing and transport fleet, accounting for roughly 80 percent of the country’s consumption.

The near total dependence saw the Maldives ranked dead last in report published by the UNDP in 2007 on the vulnerability of developing countries to fluctuating oil prices, a fair stretch behind Vanuatu, effectively placing the country among the world’s most oil-addicted nations.

“Island countries in general are extremely vulnerable to increased oil prices. They comprise distant and small markets and have to bear the burden of higher shipping costs, while electrical power generation is largely fueled by diesel,” the report noted.

The Maldives dependency on oil was discussed in October 2012 by President Mohamed Waheed at the World Energy Forum in Dubai.

“A development path primarily based on expensive diesel generated electricity is unsustainable in any country, let alone a small country like Maldives,” said Waheed at the forum’s opening ceremony.

“Today, we spend the equivalent of 20 percent of our GDP on diesel for electricity and transportation. We have already reached the point where the current expenditure on oil has become an obstacle to economic growth and development,” he continued.

Waheed explained that the current price of 35-70 US cents per KW hour meant that the government was being forced to provide “heavy subsidies” to consumers, giving little option but to move towards a low carbon alternative.

State Trading Organisation (STO) Managing Director Shahid Ali was not responding to calls at time of press.

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