Indian assistance sought to settle fuel bill payment

Sri Lanka is using every option to find dollars to buy crude oil from West Asia and refined petroleum from other areas including Singapore as the price hike in the international market is unbearable for the Ceylon Petroleum Corporation ( CPC), Finance Ministry sources divulged.

Negotiations are underway with the Indian government for a US$500 million credit line to purchase fuel while the Central Bank is ready to release funds for the remaining quarter of the year for the fuel procurement, a senior official of the ministry said.

Concessional financing of about $ 2 billion has already been provided to Sri Lanka through various Indian government-supported Lines of Credit.

The government also plans to offer long term contracts to Indian companies such as Reliance Industries to purchase refined petroleum products to meet the country’s demands.

These contracts cover a period of eight months and will start from next December as some of the existing contracts for the purchase of refined petroleum products have expired.

State- run CPC has to repay around $ 3.3 billion to the two state banks for its borrowings during past periods when there was pressure on the rupee, he disclosed.

The Energy Ministry has explored every avenue holding discussions with India and the UAE to obtain credit lines as the country’s oil bill is rising rapidly amidst dollar scarcity.

Energy Minister Udaya Gammanpila has already held fruitful discussions with the UAE to purchase fuel on long term credit, Energy Ministry sources confirmed.

The Central Bank has assured that it will release a sum of US$600 million to buy fuel from the international market and this amount will be provided to CPC in three instalments of $200 million each till the end of this year, Minister Udaya Gammanpila disclosed.

It has also been revealed that the cabinet of ministers has given its approval to obtain a massive loan of $ 2.5 billion from Global Concepts, Inc a US company with a grace period of two years at an annual interest rate of 3 percent with a repayment period of 12 years.

This action is reported to have been taken place amidst Finance Ministry’s intervention to support CPC operations by issuing a Treasury guarantee amounting to $ 1.8 billion as collateral to secure the credit facilities from the two state banks, ministry sources explained.

The CPC has entered into several long term contracts with international suppliers to maintain a steady fuel supply amidst a depletion of stocks.