Sri Lanka will obtain $500 million loan facility from India amidst a warning by the Ceylon Petroleum Corporation (CPC), the government’s cash-strapped fuel supplier, that the supply could only be guaranteed till January 2022.
The entire loan amount will be used to import necessary fuel supplies specially petrol and diesel.
“We are planning to get this loan urgently so that we could keep the supply of fuel to the country,” CPC Chairman Sumith Wijesinghe told the media, adding that the Indian High Commission in Colombo has made a special intervention to get the loan expedited.
The agreement on this is to be signed between the Energy Ministry secretaries of the two countries.
The loan facility was agreed in the backdrop of Energy Minister Udaya Gammanpila has cautioned the Finance Ministry about the CPC’s dire financial crisis.
The Minister who has said that the importation could be hampered if a quick solution was not given and has suggested tax slashes for imports and price revision as immediate solution to the crisis.
He also has warned that if India-run Lanka Indian Oil Company (LIOC) increase prices there would be high demand for CPC to supply fuel increasing the losses and aggravating the crisis.
So far, the CPC has suffered over $410 million losses this year and it is predicted that the loss could be over $590 million by the end of 2021.