Sri Lanka to Buy Fuel from Indian Oil to Tide Over Energy Crisis

Sri Lanka has chosen to buy 40,000 metric tonnes of petrol and diesel from the Indian Oil Corporation, according to a Cabinet note released on Tuesday, as part of the government’s efforts to address the island nation’s current fuel and energy crisis. In the midst of a severe foreign exchange crisis, Power Minister Gamini Lokuge announced that Sri Lanka will hold negotiations with the Indian Oil Corporation’s local business.

Since 2002, the Lanka IOC, a Sri Lankan affiliate of India’s largest oil company, Indian Oil Corporation (IOC), has been operating in Sri Lanka. The Ministry of Energy has considered purchasing 40,000 metric tonnes of diesel and 40,000 metric tonnes of gasoline with the IOC, according to a Cabinet statement. “Accordingly, the Indian Oil Corporation has agreed to supply a shipment of 40,000 metric tonnes of diesel,” it said.

The Cabinet of Ministers authorised the Minister of Energy’s proposal to take additional steps to purchase the oil consignment. Sri Lanka has been considering several possibilities to facilitate efforts to prevent fuel pumps from turning dry in recent weeks, as the island nation has been dealing with a serious foreign exchange problem in order to pay for its imports.

Fuel shortages were forecast by Energy Minister Udaya Gammanpila due to the country’s inability to pay for imports. The government sought the (IndianOil Overseas) IOC’s local operation (IndianOil’s subsidiary in Sri Lanka) LIOC to import fuel for the government as the crisis loomed. The (IndianOil’s subsidiary in Sri Lanka) LIOC had previously refused the request because they, too, were experiencing a foreign currency scarcity.

Sri Lanka is currently experiencing a severe foreign exchange crisis as its reserves continue to dwindle. Due to a scarcity of money to pay for imports, the country is experiencing a shortage of practically all essentials. Additionally, power cuts are imposed during peak hours due to a lack of fuel to drive turbines by the state power agency.

Because the electricity board has large unpaid bills, the state fuel entity has halted oil deliveries. The only refinery in the country was recently shut down due to a lack of funds to pay for crude imports in dollars. The Indian government announced a US$1 billion aid package for Sri Lanka last month, in addition to other balance-of-payments assistance. The US$ 1 billion loan credit facility will be used to avert a food crisis while allowing items and medicines to be imported. There will also be US$ 500 million set aside for fuel imports from India.