Sri Lanka seeks $500 mn loan from India for fuel purchase

By: |
October 17, 2021 1:54 PM

Lanka is facing a severe foreign exchange crisis after the pandemic hit the nation's earnings from tourism and remittances, Finance Minister Basil Rajapaksa had said last month.

He said the facility would be utilised for purchasing petrol and diesel requirements.

Sri Lanka has sought a USD 500 million credit line from India to pay for its crude oil purchases amid a severe foreign exchange crisis in the island nation.

The move came few days after energy minister Udaya Gammanpila warned that the current availability of fuel in the country can be guaranteed only till next January.

The state-run Ceylon Petroleum Corporation (CPC) owes nearly USD 3.3 billion to the two main government banks — Bank of Ceylon and People’s Bank. The state oil distributors imports crude from the Middle East and refined products from other areas, including Singapore.

“We are currently engaged with the Indian High Commission here to obtain the facility (USD 500 million credit line) under the India-Sri Lanka economic partnership arrangement,” CPC Chairman Sumith Wijesinghe was quoted as saying by local news website newsfirst.lk.

He said the facility would be utilised for purchasing petrol and diesel requirements.

The energy secretaries of both India and Lanka are expected to sign an agreement for the loan soon, the report quoted Finance Secretary S R Attygalle as saying.

The government has put on hold the expected retail price hike of fuel despite the last week’s increase in cooking gas and other essentials.

The price hike in the global oil prices has forced Lanka to spend more on oil imports this year. The country’s oil bill has jumped 41.5 per cent to USD 2 billion in the first seven months of this year, compared to last year.

Lanka is facing a severe foreign exchange crisis after the pandemic hit the nation’s earnings from tourism and remittances, Finance Minister Basil Rajapaksa had said last month.

The country’s Its GDP contracted by a record 3.6 per cent in 2020 and its foreign exchange reserves plunged by over a half in one year through July to just USD 2.8 billion. This has led to a 9 per cent depreciation of the Sri Lankan rupee against the dollar over the past one year, making imports more expensive.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Tomato prices skyrocket to Rs 140/kg in South due to rains
2Gold rate falls as FED speculation keeps pressure on metals, expect prices to move sideways to down
3Sugar output touches 47.21 lakh tonne till Nov-end: Isma