India offers $ 500 mn ‘critical support’ to Sri Lanka to purchase petroleum

Colombo: India on Tuesday offered a new Line of Credit (LOC) of USD 500 million to Sri Lanka for purchase of petroleum products, in critical support to the island nation that is faced with imminent power outage due to shortage of forex.

Indian External Affairs Minister S. Jaishankar extended this critical support in his letter addressed to the Foreign Minister of Sri Lanka, Prof. G.L. Peiris, said the Daily Mirror.

The Indian High Commission in Colombo said in tweets:

“A friend holds out a helping hand again!!!

“Energizing bilateral economic partnership, #India offers a credit line of USD 500 mn to Sri Lanka for purchase of petroleum products.

“Critical support by India follows a discussion between EAM

@DrSJaishankar &Hon’ble Fin Minister @RealBRajapaksa

“India extended forex support of USD 900 million was earlier this month. “

On January 15, EAM Jaishankar held a virtual talk with Basil Rajapaksa during which it was indicated that India would extend a USD 1.5 billion Line of Credit to Sri Lanka to import food, essential items, medicine and fuel.

The two sides had also held a detailed discussion on various aspects of robust economic partnership between the two countries.

Earlier, India had extended foreign exchange support of over USD 900 million to Sri Lanka – which comprised of US$ 400 million under the SAARC currency swap arrangement and deferral of Asian Clearing Union settlement of USD 515.2 million by two months, which would assist Sri Lanka.

A readout of the January 15 meeting said that EAM Jaishankar conveyed that “India has always stood with Sri Lanka, and will continue to support Sri Lanka in all possible ways for overcoming the economic and other challenges posed by COVID-19 pandemic. As close friends and maritime neighbours, both India and Sri Lanka stand to gain from closer economic interlinkages”.

In a pointer to the acute power problem being faced by Sri Lanka due to forex shortage, the Sapugaskanda thermal power station has already stopped working due to shortage of furnace fuel.

The Ceylon Electricity Board’s (CEB) diesel and furnace oil stocks will be sufficient only until Tuesday evening for electricity generation, an official said.

He told the Daily Mirror that, according to the statement made by Energy Minister Udaya Gammanpila on Monday, the whole country should be in the dark by Wednesday.

“More than 2,000 metric tons of furnace oil and diesel fuel will be required for tomorrow’s electricity generation. If we are unable to provide sufficient stock, more factories and companies will have to stop their operations from tomorrow, ” he said.


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