India to send 40,000 tonnes of diesel to crisis-hit Sri Lanka
India has acceded to a request from Sri Lanka to urgently provide a consignment of diesel in addition to monthly fuel supplies under a $500-million line of credit to tide over a severe shortage amid the island nation’s economic crisis.
State-run Indian Oil Corporation is expected to provide a consignment of 40,000 tonnes of diesel to Sri Lanka soon, people familiar with the matter said on Thursday. This will be in addition to the seven monthly shipments of petrol, diesel and aviation fuel being sent to Sri Lanka under the line of credit for purchasing petroleum products that was finalised in February.
The Indian side accepted Sri Lanka’s request for additional supplies of diesel despite the disruptions and increase in fuel prices in the global market due to the Ukraine conflict, the people cited above said on condition of anonymity. The request was made because of a sudden and severe shortage of diesel in Sri Lanka in the past few weeks, the people added.
The Indian side is now working to put together the consignment for Sri Lanka after accounting for considerable domestic requirements. There are also problems in arranging shipping for the fuel consignments, the people said.
The oil ministry and Indian Oil Corporation did not respond to an email query on the matter. A commerce ministry official, who didn’t want to be named, said supply chains, particularly for commodities and energy, have been disrupted because of the global geo-political situation following Russia’s invasion of Ukraine on February 24.
“The government and the industry are coordinating with each other to resolve specific issues such as availability of shipping facilities,” the official said.
Matters related to global supply disruptions of commodities because of the Ukraine conflict and related issues are being tackled on a case-to-case basis with the help of related departments and ministries, the people cited above said.
India’s Export Import (Exim) Bank and the Sri Lankan government signed an agreement for the $500-million line of credit for purchasing petroleum products from the Indian side on February 2. The Indian side extended the support for fuel imports in response to Colombo’s urgent requirements, which figured in a virtual meeting between external affairs minister S Jaishankar and Sri Lanka’s finance minister Basil Rajapaksa on January 15.
India has also extended a Saarc currency swap facility of $400 million and deferred the payment of $515.2 million to the Asian Clearing Union (ACU) by two months to assist Sri Lanka.
On March 17, India extended a $1-billion short-term concessional loan to Sri Lanka to help the island nation cope with one of its worst economic crises in decades. The line of credit from the State Bank of India will be used to import food, medicines and other essential items from India.
The agreement for this line of credit was signed during Rajapaksa’s second visit to India since last December. During a meeting with Rajapaksa, Prime Minister Narendra Modi said India “would continue to stand with the friendly people of Sri Lanka”.