Credit line

India Fuel Line of Credit at the end of this month

$ 500 million line of credit over 3 years at nominal interest rateTerms to be finalized: AttygalleGammanpila reiterates that there is no shortage of fuel

BY Shenal Fernando

The $ 500 million fuel line of credit, which Sri Lanka requested from India some time ago, is expected to be received by the country by the end of this month, amid a crisis aggravated fuel, Morning business learn.

Speaking to us yesterday (21), Secretary of the Treasury and Ministry of Finance SR Attygalle said discussions are currently underway and they hope to settle India’s line of credit for fuel oil. ‘by the end of November.

Commenting on the terms of the line of credit, he said: “Discussions are still ongoing and the terms have yet to be finalized. It will be a normal three-year line of credit for a nominal interest rate.

Meanwhile, a senior Treasury source recently told us that talks about Oman’s $ 3.6 billion line of credit for the purchase of fuel are proceeding slowly.

Last Monday (15), Energy Minister Udaya Gammanpila announced the temporary closure of the Sapugaskanda oil refinery for a period of 50 days, claiming that the import of refined gasoline or diesel instead of Importing crude oil and refining it in Sri Lanka would be beneficial in dealing with the country’s current currency crisis.

“We are currently in discussions with several countries to obtain loan facilities. At current prices, we need $ 350 million in fuel imports per month. Sri Lanka is currently in a weak position in terms of obtaining loan facilities. Once this currency crisis is resolved, we will import crude oil again, ”added Gammanpila.

Following the announcement of the temporary shutdown of the Sapugaskanda oil refinery last Monday, fears of a fuel shortage have become widespread, leading to a fuel-buying frenzy.

Therefore, Gammanpila has taken steps to reassure the public that there will be no shortage, noting, “The fuel shortage is not real but created with the help of the media. When everyone goes to a gas shed and starts filling their gas tanks and cans, it creates an artificial temporary shortage of fuel. People have used the media to spread this speculation about a fuel shortage. “

Talk to Morning business yesterday the minister reiterated once again that there is no fuel shortage in the country and further claimed that they receive fuel shipments once every three days.

Responding to a question from us on how the government finances these fuel imports, given the prevailing currency crisis, Gammanpila said, “The policy of the Sri Lankan government is that when we manage the limited foreign exchange that we have where the first priority goes to drugs and medical equipment while the second priority is given to fuel. Although there may be difficulties in making payments for other products, there will be no such problems for fuel. “

In the absence of a foreign currency denominated line of credit to finance the country’s fuel imports, questions have arisen as to whether fuel imports will result in a further depreciation of Sri Lanka’s foreign exchange reserves which Central Bank data, fell to $ 1.6. billion dollars at the end of October against 2.1 billion dollars at the end of September.

However, according to Gammanpila, fuel imports will not impact our foreign exchange reserves, as “Sri Lanka typically earns around $ 1 billion per month from export earnings and other inputs such as tourism, expatriate workers’ remittances and foreign investment. From these inflows of US dollars, priority will be given to drugs or health-related products and then to fuel ”.

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