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CPC to finalise tender with Indian Oil Corporation

28 Feb 2022

  • Tender comes under $ 500 mn Indian EXIM Bank credit line
  • Bidding period closed last Friday (25)
  • Only IOC bid for the tender: Energy Ministry
    BY Shenal Fernando  The Ministry of Energy is currently finalising a tender with the Indian Oil Corporation (IOC) to supply fuel to Sri Lanka under the $ 500 million line of credit (LOC) for the purchase of petroleum products provided by the Export Import Bank (EXIM) of India in January. Speaking to The Morning Business yesterday (27), Ministry of Energy Secretary K.D.R. Olga said: “The calls for tender with regard to the $ 500 million Indian fuel credit line were closed on Friday (25) and we are currently evaluating the bids we have received and will be coming to a final decision within the next two days.”  Commenting further, she stated that the details regarding the bids received couldn’t be disclosed due to ethical reasons since the  ministry is currently carrying out the evaluations of the bids, and therefore, stated that the final decision will be announced by Tuesday (1 March).  However, when The Morning Business reached out to Ministry of Energy Media Spokesman Aravinda Athukorala, he disclosed that they had received only one bid, in relation to the tenders called for the $ 500 million Indian fuel credit line and admitted that the sole bid was by the Indian Oil Company. The $ 500 million LOC for the purchase of petroleum products in question was signed between the EXIM Bank of India on 2 February. The agreement was signed by, representing Sri Lanka, Treasury Secretary S.R. Attygalle and representing India, EXIM Bank Chief General Manager Gaurav Bhandari. It is speculated that in terms of the LOC agreement, the tender process for the procurement of the required petroleum products was open only to Indian suppliers. However, The Morning Business could not confirm this claim. This $ 500 million LOC will be essential for Sri Lanka in sourcing its fuel in the near-term with around $ 1.3 billion required to finance the country’s fuel requirements over the next three months as per Minister of Energy Udaya Gammanpila. He further stated that the Government is currently exploring other funding options to source the remainder. However, the amount the Energy Minister states is based on today’s rates in the international oil markets  at around $ 100 per barrel. With Russia steadfast in its military campaign in Ukraine, the resulting economic and financial sanctions which will follow may well push the price of a barrel of Brent crude oil to $ 115 or beyond. How the Government plans to overcome such a possibility remains unclear.  

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