New Delhi: Faced with a massive foreign exchange crisis, the Sri Lankan Cabinet has given approval to $500 million loan from the Exim Bank of India to buy petroleum products amid record hike in fuel prices. The island nation has been considering various options to facilitate measures to prevent fuel pumps from going dry amid unprecedented economic turmoil.
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Sri Lanka is facing a severe shortage of almost all essentials due to paucity of dollars for paying for the imports. The government also raised the petrol price by 24.3 percent and diesel by 38.4 percent, a record hike in fuel prices amid the country's worst economic crisis in decades. With the second fuel price hike since April 19, the most-used Octane 92 petrol would cost Rs 420 ($1.17) and diesel Rs 400 ($1.11) a litre.
Work from home has been encouraged to minimise the use of fuel and to manage the energy crisis.
The Cabinet approved a proposal to seek an Indian Exim Bank loan to purchase fuel, said energy minister Kanchana Wijesekera, according to news agency PTI report.
"In the present economic conditions prevailing approval was granted for the proposal by the power and energy minister to seek a 500 million dollar loan from the Indian Exim Bank for the purchase of petroleum products," a Cabinet note said.
Sri Lanka had already received $500 million from the Exim Bank of India and another $200 million from the State Bank of India for oil purchases, added Wijesekara. It is estimated that from June Sri Lanka would need $530 million for fuel imports in the current forex crisis.
India has delivered around 40,000 metric tonne petrol to Sri Lanka after 40,000 metric tonne of diesel was supplied under the Indian credit line to help ease the acute fuel shortage. It had also extended an additional $500 million credit line to Sri Lanka in April to help the neighbouring country import fuel.
(With inputs from PTI)