Sri Lanka | IOC Sri Lanka to buy fuel from IOC to avert energy crisis
New Delhi: Sri Lanka will buy 40,000 metric tonnes each of petrol and diesel from the Indian Oil Corporation (IOC) to overcome its fuel and energy crisis, media reports said.
The announcement was made on Tuesday, weeks after Sri Lankan Power Minister Gamini Lokuge said the country will hold talks with the Indian Oil Corporation's local entity amid a severe foreign exchange crisis.
Lanka IOC, the subsidiary of the Indian oil major, has been operating in Sri Lanka since 2002.
News agency PTI reported that a Cabinet note on Tuesday said that Indian Oil Corporation has agreed to supply a shipment of 40,000 metric tonnes of diesel.
Earlier, Energy Minister Udaya Gammanpila had predicted fuel shortages due to a lack of foreign exchange to pay for its imports.
When the government felt that the country would be soon engulfed by an energy crisis, it approached LIOC for the supply of essential fuels.
Initially, LIOC declined as they were also facing problems in importing owing to the shortage in foreign exchanges crunch.
The country's only refinery was recently closed as it was unable to pay for fuel imports.
Last month, India announced a billion dollar aid package apart from other balance of payment support to Sri Lanka.
The assistance is being given to avoid a food crisis while allowing for the import of items and medicines.
Additionally, India is giving $ 500 million to Sri Lanka for importing fuel from India.
The Covid-19 pandemic has left Sri Lanka in a deep economic crisis, pushing at least half a million people into poverty amid soaring inflation that has forced a large chunk of the population to cut down on food and fuel requirements.
The island nation is hit by worsening food shortage brought about by multiple factors, including loss of tourism due to Covid-19, vast government spending, tax cuts leading to revenue erosion, huge debt repayments to China, and the most significant – Rajapaksa government’s ill-timed decision to make agriculture 100 percent organic by banning chemical fertilizers.
According to a report in The Guardian, opposition MP and economist Harsha de Silva recently warned the Sri Lankan parliament that by next year foreign currency reserves would drop to $437m by January next year, whereas the total foreign debt to service from February to October 2022 would stand at $4.8bn to service would be. “The nation will be totally bankrupt,” he said.
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