Ongoing line of credit to Sri Lanka touches USD 1.5 bn, consignments to continue: Indian High Commissioner

The ongoing Lines of Credit (LOCs) that India has extended to crisis-hit Sri Lanka for procurement of fuel and food have currently totalled USD 1.5 billion and the consignments will further continue, India's High Commissioner to Sri Lanka Gopal Baglay toldon Tuesday.

India has extended a financial package to Sri Lanka, which is reeling under a financial crisis to ensure that it can meet some of the more immediate needs and help stabilise its domestic economy.

Since January this year, support from India to Sri Lanka exceeded USD 2.5 billion, the Indian envoy had said earlier.

A USD 500 million line of credit for fuel purchases was signed in February and since the beginning of March, four consignments totaling over 150,000 tons of jet aviation fuel, diesel and petrol have arrived in Sri Lanka, Baglay had said. Five more consignments are to follow till May and another line of credit of USD 1 billion for food, medicine and essential items was signed last month, the envoy said.

The USD 1 billion line of credit to Colombo will help in keeping their food prices and fuel costs under check.

Besides, according to Bagley, the first consignment of rice from India is expected to arrive in Sri Lanka shortly under this credit facility.

India has also extended a USD 400-million currency swap and has deferred payments owed by the Central Bank of Sri Lanka owed to the Reserve Bank of India under the Asian Clearance Union worth several hundred million dollars.

After massive protests over shortages of essential food, fuel and long power cuts in the country and demands for the resignation of President Gotabaya Rajapaksa, a state of emergency was declared in the island country and imposed a nationwide curfew.

The Sri Lankan rupee is fast depreciating against the dollar and foreign debt is mounting. The Sri Lankan government's income has also taken a big hit due to a drop in tourism that has given rise to gas and fuel shortages, leading to massive power cuts.

In February, New Delhi provided a short-term loan of USD 500 million to Colombo for the purchase of petroleum products through the Ministry of Energy and the Ceylon Petroleum Corporation on behalf of the Government of Sri Lanka.

Three months before that, in November 2021, India gave 100 tonnes of nano nitrogen liquid fertilisers to Sri Lanka as their government stopped the import of chemical fertilisers.

The total fuel delivered to the people of Sri Lanka, over the last 50 days, amounts to nearly 200,000 MT including a consignment of 40,000 MT, by Indian Oil Corporation, outside the line of credit facility, in February 2022. Energy Minister Gamini Lokuge thanked the Government of India for the fuel consignments.

The first consignment of rice from India is expected to arrive in SL shortly under this credit facility. The rice shipments could help Colombo bring down rice prices, which have doubled in a year, adding fuel to the unrest. "Rice loading has started in southern ports," said BV Krishna Rao, managing director of Pattabhi Agro Foods, which is supplying rice to Sri Lanka State Trading (General) Corp under the Indian Credit Facility Agreement.

The Government of India also continues to encourage efforts toward medium to long-term capacity creation through enhanced Indian investment in Sri Lanka in key sectors that include ports, renewable energy, manufacturing, etc.

India and Sri Lanka recently concluded a long-pending agreement to jointly develop oil tank facilities in Trincomalee, and have planned a number of infrastructure projects involving the private sector.

( With inputs from ANI )

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