Sri Lanka extends $200m line of credit with India for fuel: Power Min

Sri Lanka has extended a $200 million line of credit with India to procure emergency fuel stocks, the country’s power and energy minister announced on Monday, with four shipments due to arrive in May.

Colombo was also in talks with New Delhi on extending the line of credit for another $500 million, Minister Kanchana Wijesekera told a news conference.

Hard hit by the pandemic and strapped for revenue after Gotabaya Rajapaksa’s government imposed steep tax cuts, the island nation is now also strapped for foreign currency and has approached the International Monetary Fund for a bailout package. emergency.

Rampant inflation and shortages of imported food, fuel and medicine have led to weeks of sporadically violent protests.

Sri Lanka used $400 million, over several shipments in April, of the $500 million line of credit granted by India earlier this year, Wijesekera said. Two fuel deliveries will be paid for with the remaining funds in May.

“The Indian line of credit was extended by $200 million recently and it will be used for four shipments in May.

Talks are continuing for an additional $500 million with India, so in total the line of credit will be $1.2 billion,” Wijesekera said.

However, Sri Lanka still faces payment difficulties for fuel imports, with the state-run Ceylon Petroleum Corporation (CPC) owing $235 million for shipments already received, while around $500 million additional will be required to pay maturing letters of credit over the next six years. weeks, he added.

Sri Lanka will also need dollars to pay for crude oil shipments to supplement imports from India.

“We have drawn up supply plans until June, but we still have to figure out how to find sufficient quantities of foreign currency to make the payments,” Wijesekera said.

(Reporting by Uditha Jayansinghe; Writing by Alasdair Pal; Editing by Catherine Evans and Hugh Lawson)

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