ADB approves USD 50M emergency loan for Maldives fuel imports

The Asian Development Bank (ADB) has approved an emergency assistance loan of USD 50 million to the Maldives to support fuel imports as Middle East conflict continues to drive a surge in global prices.

In a statement on Tuesday, the ADB said the loan is for the Energy Security Emergency Project, which seeks to finance emergency fuel imports to sustain essential services including electricity and water supply, food and health logistics, inter-island transport, and waste management.

The Maldives imports 100 percent of its fuel, primarily diesel and petrol from the Middle East.

In Maldives, the Middle East conflict has driven up fuel prices and cut tourist arrivals, limiting the government’s ability to finance fuel imports.

The ADB noted that imported fuel generates 94 percent of the country’s electricity and powers the desalination plants that supply drinking water, leaving few alternatives if supplies are interrupted.

ADB’s loan will finance critical diesel imports to help maintain electricity and water supplies, food and health-care logistics, interisland transport of people and cargo, and waste management.

The support complements USD 40 million approved by the World Bank for the same purpose back in May.

Information released by the Environment Ministry back in May shows the Middle East conflict has driven the cost of the country’s monthly fuel imports from USD 50 million to USD 116 million – marking an increase of 132 percent.

The country needs 8,000 barrels of diesel daily or around 2.9 million barrels yearly to produce electricity.

The small island nation spent around MVR 10 million on fuel imports last year alone.