Sri Lanka seeks $500 mn loan from India for fuel purchases

COLOMBO: The Sri Lankan Cabinet has approved seeking a 500 million dollar loan from the Exim Bank of India for the purchase of petroleum products amid a severe foreign exchange crisis in the island nation.

It had already received 500 million dollars from the Exim Bank of India and another 200 million from the State Bank of India for oil purchases. The government is also planning to undertake a feasibility study on oil exploration in the Mannar Basin, a shallow bay part of the Laccadive Sea in the Indian Ocean, which has about 5 trillion cubic feet of natural gas, enough to meet the energy needs of the island nation for the next six decades. A natural gas field was reportedly discovered in 2011, but the country has not yet capitalised on this treasure trove, which could solve SL’s requirements.

Crisis-hit Sri Lanka on Tuesday raised the petrol price by 24.3 per cent and diesel by 38.4 per cent, a record hike in fuel prices amidst the country’s worst economic crisis due to the shortage of foreign exchange reserves.

With the second fuel price hike since April 19, now the most-used Octane 92 petrol would cost 420 rupees and diesel 400 rupees a litre, an alltime high. The decision to raise the Octane 92 petrol price by 24.3 per cent or 82 rupees and diesel by 38.4 per cent or 111 rupees per litre was taken by the state fuel entity, Ceylon Petroleum Corporation (CPC).

“Fuel Price will be revised from 3 am today. Fuel pricing formula that was approved by the Cabinet was applied to revise the prices,” Power and Energy Minister Kanchana Wijesekara said on Twitter.

“Price revision includes all costs incurred in importing, unloading, distribution to the stations and taxes. The Cabinet also approved the revision of transportation and other service charges accordingly. The formula will be applied every fortnight or monthly,” he said. The hike came as the public continues to suffer in long queues at fuel stations hit by shortages.

Lanka IOC, the Sri Lankan subsidiary of India’s oil major Indian Oil Corporation, has also raised the retail prices of fuel. As a measure to mitigate the costs, the government announced that the heads of institutions would be given the discretion over the physical attendance of employees.

Are you in Chennai? Then click here to get our newspaper at your doorstep!