Jan 18, 2022

India offers LoC of US$ 500 Mn. for fuel

India has offered a Line of Credit (LOC) of USD 500 million to Sri Lanka for purchase of petroleum products.

External Affairs Minister Dr. S. Jaishankar extended this critical support in his letter addressed to his Sri Lankan counterpart - Prof. G.L. Peiris.

Last Saturday (15), Dr. Jaishankar and the Sri Lankan Finance minister - Basil Rajapaksa held a virtual meeting. Afterwards, in a Twitter thread, Dr. Jaishankar had said, "Discussed the early realisation of USD 1 billion term loan facility for essential commodities and of USD 500 million LoC for fuel purchase."

Recently India had extended foreign exchange support of over USD 900 million to Sri Lanka.

'These measures are in line with India’s commitment to stand with Sri Lanka, contribute to Sri Lanka’s economic growth and impart greater momentum to bilateral economic and commercial partnership,' a statement by the Indian High Commission in Colombo notes.

IOC declines request - Minister

Earlier today (18), Sri Lanka’s Minister of Power - Gamini Lokuge had said that Lanka IOC has informed the Ceylon Electricity Board that it cannot deliver fuel as it does not have extra fuel stocks.

“A fuel tanker of the CPC has also reached the Port. We have held discussions with the Government to somehow release the shipment by settling the payment through the State Treasury at least. If we obtain that shipment of fuel, this problem will be resolved. The consumers are to pay in Rupees to the Ceylon Electricity Board. We don’t get paid in foreign currency. Therefore, how can we pay in Dollars, when we don’t have a foreign exchange,” he had told reporters.

Only way out - Ranil

Meanwhile, issuing a special statement on Dec. 28, last year, leader of the UNP - Mr. Ranil Wickremesinghe had proposed that the government must take immediate steps to  finalize discussions with the Indian government to obtain foodstuff and oil on a line of credit.

"This is the only way out. This is only a temporary solution," he said.

However, he emphasized that lines of credit or foreign loans do not increase the country's foreign exchange reserves.

Click here for the full video statement.


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