Credit line

Sri Lanka awaits green light from India for new fuel supply credit line

Sri Lanka is awaiting official confirmation from India on a new line of credit that would see the cash-strapped nation stock up on gasoline and diesel for the next four months, the minister said on Friday. Kanchana Wijesekara energy.

Sri Lanka is currently facing its worst economic crisis since its independence from Britain in 1948.

The economic crisis has caused an acute shortage of essential items like food, medicine, cooking gas and fuel across the island nation.

State-owned fuel entity Ceylon Petroleum Corporation (CPC) said the last delivery of diesel under India’s existing $700 million fuel credit line arrived on Thursday.

We received an unofficial communication about a new fuel credit line three to four weeks ago, so far no official confirmation of it being available,” Wijesekara said.

He said India’s planned $500 million line of credit would secure the country’s gasoline and diesel supplies for the next four months.

The government was also trying to make arrangements to buy crude oil, even though it is a more expensive operation.

Petrol stations are experiencing winding queues as the government eases the hassle to manage the crisis.

The minister said only 3,000 MT of diesel is delivered to meet the daily demand of 5,400 MT.

Only 2,600 MT of gasoline are issued daily while the demand is 3,400 MT. Wijesekara said fuel suppliers no longer extend credit in Sri Lanka and require upfront cash payments.

Current shortages have been compounded by the government’s inability to convince the state-owned Bank of Ceylon to open letters of credit for fuel imports.

In order to deal with fuel shortages and the resulting transport difficulties, public sector employees are allowed to consider Fridays as public holidays from June 17, the Ministry of Public Administration said in a circular. .

This will be in effect for the next three months.

A special leave was granted on Friday for all schools due to transport difficulties.

Private bus operators said they were running only 20% of services due to fuel shortages.

State employees are encouraged to engage in agricultural activities to grow food during the Friday holiday to alleviate the perceived food crisis ahead, the ministry said.

On Tuesday, Prime Minister Ranil Wickremesinghe said a new line of credit provided by India would support the cash-strapped island nation’s fuel purchase for another four months from July, even as a LPG shipment of 3,500 MT reached Sri Lanka.

The gas from this shipment will be delivered to locals that source supplies in bulk such as hospitals, hotels and crematoriums.

The country is experiencing long queues for refueling at pumping stations as the government struggles to fund fuel imports to maintain a sufficient reserve for at least three months.

A shift to fuel rationing is to be implemented from next month as the forex crisis deepens.

The country on the verge of bankruptcy, with an acute currency crisis that led to a default on external debt payments, announced in April that it was suspending the repayment of nearly $7 billion in external debt due for this year on approximately $25 billion due through 2026.

Sri Lanka’s total external debt stands at $51 billion.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor