The Maldives maintained uninterrupted supplies of fuel, aviation fuel and cooking gas despite rising transportation costs and disruptions affecting international markets, State Trading Organisation (STO) Managing Director Shimadh Ibrahim has said.
Speaking at the “Iqthisaadhuge Dhefarai” forum organised by the Ministry of Economic Development and Trade, Shimadh said coordinated efforts between STO and private sector suppliers ensured that the country did not have to introduce fuel or gas rationing even as supply pressures intensified elsewhere.
He said several countries experienced shortages of essential commodities during periods of global market instability, while disruptions to aviation fuel supplies had affected flight operations in some destinations.
“When looking at the availability of goods, while many countries in the world ran out of certain items, especially fuel and aviation fuel, aviation fuel was brought into the Maldives without interruption,” Shimadh said.
“We import fuel into the Maldives through organised efforts between STO and some private companies, and we did not allow a shortage of fuel or gas to happen in the Maldives.”
Shimadh said maintaining those supplies has become increasingly expensive, with freight and transportation costs emerging as one of the main factors pushing commodity prices higher internationally.
The effects have also been visible in the operations of Maldives State Shipping (MSS), STO’s shipping subsidiary, which operates feeder services connecting the Maldives with Colombo.
Fuel procurement has faced additional pressures from geopolitical tensions in the Middle East.
As the country’s principal fuel importer, STO sources much of its petroleum requirements from Oman. Although the port used by STO is outside active conflict areas, Shimadh said vessels travelling through the wider region are required to obtain specialised war risk insurance.
That requirement has added significantly to transportation costs.
According to Shimadh, insurance companies issue the required coverage for a minimum period of seven days, despite STO’s vessels requiring considerably less time to complete the relevant journey. This means the company must pay for additional days of coverage that are not used during the actual voyage.
The increase in insurance premiums has come alongside higher shipping and fuel acquisition costs.
Shimadh said STO’s oil procurement costs peaked during May and June, when they rose to as much as three times their previous levels.
Chartering vessels has also become considerably more expensive. A tanker that could previously be chartered for around USD 600,000 would now cost approximately USD 950,000, he said.
The increase represents an additional USD 350,000 for a comparable charter.
Shimadh said these expenses, including the Free On Board price of fuel, freight charges and insurance premiums, are external costs over which STO has limited control.
To reduce its exposure to volatile charter rates and give the company greater control over fuel transportation, STO has acquired two oil tankers of its own.
The second tanker entered service shortly before the latest escalation in regional tensions, although Shimadh said the acquisition process had begun earlier.
Having dedicated vessels provides STO with greater flexibility in arranging fuel shipments at a time when securing tankers on the international charter market has become significantly more expensive.
Despite those pressures, Shimadh said maintaining reliable supplies to the Maldives has remained a priority.
He pointed to experiences elsewhere where supply disruptions resulted in rationing and queues for essential products, saying the Maldives had been able to avoid similar circumstances.
“Looking at our nearest neighbours, in places like India and Sri Lanka, people had to stand in queues to get gas through rationing. But by God’s will, none of this happened in the Maldives,” he said.
STO has similarly worked to maintain the availability and prices of staple food products despite higher international transportation and commodity costs.
“As for other essential items, we are maintaining the prices of staple foods and providing them regularly,” Shimadh said.
As one of the country’s largest state-owned enterprises, STO plays a central role in securing essential commodities for the Maldives, including petroleum products, cooking gas, food staples and other strategically important goods.
That role is particularly important because of the country’s dependence on imports. With communities dispersed across numerous islands and much of the country’s essential consumption supplied from overseas, changes in global shipping, energy and insurance markets can quickly translate into higher import costs.
The latest pressures have been compounded by geopolitical instability affecting major international shipping routes and energy markets.
STO’s acquisition of its own tankers, alongside coordination with private suppliers, forms part of efforts to strengthen the reliability of the country’s supply chain while reducing some of the risks associated with relying entirely on chartered vessels.
Shimadh said that despite the additional costs faced in securing and transporting essential commodities, the Maldives has continued to receive fuel, aviation fuel, cooking gas and staple foods without the widespread supply interruptions experienced in some other markets.
