Lanka inks $500-mn fuel deal with India
New Delhi, February 2
Sri Lanka on Wednesday signed an agreement with India for a $500 million credit line to help finance its fuel purchases. The first tranche will be used to buy 80,000 tonnes of petrol and diesel from Indian Oil Corporation (IOC).
India’s help has come just when Sri Lanka was faced with the spectre of dry fuel pumps. Its Energy Minister Udaya Gammanpila had warned of fuel shortages as the country had no money to pay for not just oil imports, but also medicines and food. Power cuts are already the order of the day across the island nation as many turbines have not received diesel supplies.
External Affairs Minister S Jaishankar had, in a letter to his Lankan counterpart GL Peiris on January 18, offered a new line of credit (LOC) of $500 million to Sri Lanka for the purchase of petroleum products. It was preceded by a meeting between Jaishankar and Sri Lankan Finance Minister Basil Rajapaksa.
India is likely to provide another $1 billion in credit facility to Sri Lanka for importing food, essential items and medicines.
Earlier, it had provided foreign exchange support of more than $900 million.
“These measures are in line with India’s commitment to stand with Sri Lanka, contribute to its economic growth and impart greater momentum to bilateral economic and commercial partnership,” said the Indian High Commission in Colombo in a statement.
Sri Lanka has reciprocated by ending its hesitancy over involving India in a major way in the development of a Colombo port terminal and the vast petroleum storage facilities in Trincomalee.
Sri Lanka landed in an unprecedented economic crisis from the twin impact of failure of agriculture crop and the sharp dip in tourist arrivals.
Energy crisis
- The first tranche will be used to buy 80,000 tonnes of petrol and diesel from the Indian Oil Corporation
- The credit line will ease pressure on the country’s dwindling reserves that had dipped to $3.1 billion by Dec 2021
- EAM S Jaishankar had on Jan 18 offered a new line of credit of $500 mn to Lanka for buying petroleum products
