Lanka turns to China to buy oil on credit basis

Energy Minister says talks continuing with West Asian countries to buy oil on concessionary terms

Sri Lanka has turned to China for more fuel purchases on long-term credit as the country continues to face serious issues in raising funds for oil imports.

Energy Minister Udaya Gammanpila, who returned to the country after talks with West Asian oil exporting countries to purchase fuel on long-term concessionary rates, told the Sunday Times that Sri Lanka was having discussions with China through the Chinese ambassador to purchase fuel for six months on a Sovereign Bond – the debt security issued by the Government to raise money for financing government programmes. Existing diesel and petrol purchase arrangements which end in November and January respectively, would be extended to buy fuel on credit for the next six months, he said.

More talks are to be held with the Chinese ambassador on the arrangement under which fuel will be purchased through PetroChina Company Limited, which is the listed arm of the state-owned China National Petroleum Corporation.

The move comes after similar talks with Oman to seek credit for US dollars 3.6 billion to buy refined and crude oil.

Minister Gammanpila said initial talks had been held during his recent visit to Oman and agreements needed to be finalised to obtain the facility.

Sri Lanka is expecting a five-year grace period for the repayment to be completed in 20 years, he said.

Sri Lanka is also having talks with the Indian government for a US dollar 500 million credit line to buy fuel while discussions have also been held with the United Arab Emirates on fuel purchases.