Another $ 500 mn credit from India’s EXIM Bank for fuel

The Cabinet of Ministers has approved a proposal to obtain another $ 500 million credit facility from the Export Import Bank of India (EXIM) to fund Sri Lanka’s fuel imports. 

Minister of Power and Energy Kanchana Wijesekera said that the Cabinet approved this decision at Monday’s (23) Cabinet meeting, in the midst of a severe fuel crisis in the country.

“We hope to obtain a short-term credit facility of $ 500 million from India’s EXIM Bank for fuel imports. This is an addition to the $ 500 million we initially received from India’s EXIM Bank and the $ 200 million we later received from the State Bank of India (SBI) – both this year – for fuel imports. India has agreed to provide the facility, and the Cabinet approved it on Monday,” said Wijesekera at the Cabinet decision press briefing on Monday. 

He said that while a “principle agreement” has been reached between the two countries about the latest $ 500 million, technical committee discussions are still underway about the specific terms of the credit facility. 

“We have asked for a repayment period of seven years for the new credit line,” he said. 

Early this year, India initially extended a $ 500 million credit line for fuel imports to Sri Lanka. It was later extended by $ 200 million. 

Responding to a question posed by the media regarding the matter, Wijesekera said that there is a separate account that has been established to collect the Sri Lankan rupees made from the sale of fuel from the Indian credit line facility. 

“We will be handing over the rupee value of what we have obtained to the Treasury Department, which will then bridge the gap, after which the Central Bank of Sri Lanka will do the conversion,” he said.  

The economic crisis, fuelled by the shortage of foreign exchange reserves, has affected the country’s energy sector as last week saw some of the worst fuel queues in the country so far, with the public having to endure fuel queues that last days to obtain a rationed amount of fuel for their vehicles.

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