Seeks $500 mn loan from India to buy fuel

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. Sri Lanka has been mulling different options to facilitate measures to prevent fuel pumps from going dry, as the country faces a severe foreign exchange crisis to pay for its imports.

The country is grappling with an unprecedented economic turmoil, the worst since its independence from Britain in 1948. It is struggling with a shortage of almost all essentials, due to the lack of dollars to pay for the imports.

At the Cabinet meeting held on Monday, a proposal was approved to seek an Indian Exim Bank loan to purchase fuel, Energy Minister Kanchana Wijesekera said on Tuesday. In the present economic conditions prevailing approval was granted for the proposal by the power and energy minister to seek a 500 million dollar loan from the Indian Exim Bank for the purchase of petroleum products, a Cabinet note said.

Sri Lanka 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, Wijesekara said.

From June, Sri Lanka is estimated to need 530 million US dollars for fuel imports in the current forex crisis.

On Monday, India said it has delivered around 40,000 metric tonnes of petrol to Sri Lanka, days after supplying 40,000 metric tonnes of diesel under the Indian credit line to help ease the acute fuel shortage. India extended an additional $500 million credit line to Sri Lanka last month to help the neighbouring country import fuel.