Lanka Asks for $500M Loan From India for Fuel Purchases
This occurred days after Minister of Energy Udaya Gammanpila warned that the country’s existing supply of fuel could last only till Jan 2022. The state-owned Ceylon Petroleum Corporation (CPC) owing the 2 major government banks, the Bank of Ceylon and the People’s Bank, almost USD 3.3 billion is also a major issue. The country’s wholesalers of oil buy crude oil from the Middle East and processed products from various parts of the world, notably Singapore.
Chairman of CPC, Sumith Wijesinghe, was cited by news website – newsfirst.lk as stating, “We are actively engaged with the Indian High Commission here in order to secure the facility (USD 500 million credit line) under the India-Sri Lanka economic cooperation arrangement.” The facility, he claimed, will be used to buy diesel and petrol. Finance Secretary S R Attygalle was cited in the report as stating that the energy secretaries of India and Sri Lanka are anticipated to finalize an agreement of loan soon.
The administration has agreed to hold off on raising fuel prices at the retail level despite a recent spike in cooking gas and other necessities.
The rise in international price of oil has pushed Sri Lanka to increase its oil supply spending this year. In the first seven months of this year, the country’s oil expenditure increased by 41.5% to USD 2 billion, compared to the same period the year before.
According to Basil Rajapaksa, the Minister of Finance, Sri Lanka is experiencing a major foreign currency problem as a result of the pandemic’s impact on the country’s tourist and remittances revenues.
The coronavirus pandemic has thrown many things into disarray, and this news is not unexpected. After being hammered by COVID last year, several countries are struggling financially. It would be difficult for these countries to expand and flourish without the support of other countries. Overall, it will be fascinating to see how Sri Lanka manages its crude oil supply after receiving the loan from India in the year 2022.