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$ 500 m Indian fuel credit line to take time to materialise

19 Jan 2022

  • Gammanpila says fuel procurement would take ‘some time’
  • Cites pending procedural processes as reason for delay
  • Indian Exim Bank, SL External Resource Dept. yet to sign agreement
By Shenal Fernando Even though, issuing a statement last evening (18), the High Commission of India to Sri Lanka stated that India has offered a new line of credit (LOC) of $ 500 million to Sri Lanka for the purchase of petroleum products, the commencement of the procurement process is expected to take some more time due to the need to fulfil several procedural requirements, Energy Minister Udaya Gammanpila stated. He added that Sri Lanka has received the offer documents relating to a fuel LOC from India. Speaking to The Morning Business yesterday (18), he stated: “The offer documents relating to the $ 500 million credit line have been sent to Sri Lanka. Now the Indian Exim bank and the Sri Lankan External Resources Department must first sign the agreement relating to the credit facility, after which the agreement has to be vetted by the Attorney General and then it must be approved by the Cabinet of Ministers. We will start the procurement process only after we have completed the above steps. Therefore, it will take some time to obtain the fuel.”  The statement issued by the Indian High Commission added that Indian External Affairs Minister Dr. S. Jaishankar extended this “critical” support in his letter addressed to Foreign Minister of Sri Lanka Prof. G.L. Peiris. According to the Indian High Commission, this LOC will help realise one of the four pillars of economic co-operation identified during the visit of Finance Minister Basil Rajapaksa to India in December 2021.  The press release further pointed to the recent foreign exchange support of over $ 900 million extended by India to Sri Lanka, and claimed that these measures taken by India are in line with their commitment to stand with Sri Lanka, contribute to Sri Lanka’s economic growth, and impart greater momentum to bilateral economic and commercial partnership. The Indian Express on 7 January 2022, stated that Sri Lanka could face shortage of fuel by the third week of January, quoting Gammanpila, as he urged the Central Bank of Sri Lanka (CBSL) to step in and pump in foreign currency required for imports. “Gammanpila’s grim warning comes close on the heels of the Ceylon Electricity Board (CEB), issuing a statement, asking citizens to brace for power cuts in the days to come due to its inability to purchase fuel,” it added.

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