Sri Lanka Looking At $500 Million Fuel Credit Line From India

Sri Lanka signed a deal with the Sri Lankan chapter of Indian Oil Corporation, Ceylon Petroleum Corporation and the joint venture between LIOC and CPC to redevelop around 75 oil tanks in Trincomalee.

16 tanks developed by the LIOC will be leased to it while 61 tanks will be given to the joint venture between Lanka IOC and CPC (Reuters)

New Delhi: Sri Lanka is looking at getting a USD 500 million fuel credit line from India even as both sides are eyeing to further expand energy cooperation after signing an oil tank deal, people familiar with the development said on Friday.

The island nation on Thursday signed a deal with the Sri Lankan chapter of Indian Oil Corporation (LIOC), Ceylon Petroleum Corporation (CPC) and the joint venture between LIOC and CPC to redevelop around 75 oil tanks in Trincomalee.

EXPLAINED | Sri Lanka’s Unprecedented Economic Crisis — What We Know So Far

The deal is expected to assist Sri Lanka in the development of Trincomalee as an energy and transport hub to further bolster its energy security.

According to the understanding, 16 tanks developed by the LIOC will be leased to it while 61 tanks will be given to the joint venture between Lanka IOC and CPC. Twenty-four tanks will be given to the CPC, the people said.

They said the agreement is another significant step in broadening the spectrum of mutually beneficial economic partnerships.

While the understanding to jointly develop Trincomalee oil storage facility is rooted in the 1987 Indo-Sri Lanka accord, the storage facility could be developed only in a very limited way so far due to the absence of lease which was to be signed within six months of agreement among Sri Lankan government, LIOC and CPC in 2003.

The people said Sri Lanka is looking at securing a USD 500 million fuel credit line from India's Exim Bank and preliminary talks on the matter have already been concluded.

After a telephonic conversation with his Sri Lankan counterpart, External Affairs Minister S Jaishankar on Thursday said India will support Sri Lanka in "these difficult times".

Sri Lanka has been reeling under a severe economic crisis.

It is learnt that Sri Lanka is also looking at getting USD 400 million under the current swap mechanism from a funding arrangement under SAARC (South Asian Association for Regional Cooperation).