IOC agrees fuel deal for crisis-hit Sri Lanka

Saturday, 5 March 2022 00:42 - - {{hitsCtrl.values.hits}}

NEW DELHI (Reuters): Indian Oil Corp (IOC) will supply gasoil, gasoline and jet fuel to Sri Lanka, the company told Reuters, as the island nation fights a crippling economic crisis that has caused an acute fuel shortage.

Sri Lanka has faced power outages running into hours in recent days owing to a lack of funds for fuel to fire power plants. The fuel shortfalls have also led to long lines at petrol and diesel stations over the past month.

The country needs about $ 500 million a month to source fuel, but Sri Lanka’s Central Bank has stopped releasing funds to pay for fuel shipments as it contends with a foreign exchange-related crisis.

“The supplies shall be made under a $ 500 million line of credit extended by the government of India to Sri Lanka for purchase of fuels,” IOC said on Thursday.

Nearly a third of Sri Lanka’s electricity is generated by oil-fired power plants and a similar amount comes from coal and hydropower, according to the state-run Ceylon Electricity Board.

Sri Lanka says it has sufficient coal to ensure continuous electricity supply and has vowed to stop power cuts from Saturday, but it has not said how it plans to secure fuel supplies.

IOC will supply 12-13 parcels of fuel to Sri Lanka over the next 4-5 months against a tender issued by the Ceylon Petroleum Corp, the refiner said.