Fuel pumps may go dry in Sri Lanka by end-April as India's credit line ends | World News - Hindustan Times
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Fuel pumps may go dry as Lanka to exhaust $500 mn Indian fuel credit line by April end

Apr 08, 2022 01:31 PM IST

Amid fears Sri Lanka might run out of fuel (again) by the end of this month, officials from both sides are negotiating an increase to the credit line.

Sri Lanka is expected to exhaust $500 million in fuel aid provided by India to mitigate the island nation's power crisis with the delivery of 120,000 tons of diesel and 40,000 tons of petrol over the next two weeks. India is scheduled to send three 40,000 ton-shipments of diesel on April 15, 18 and 23, with a petrol shipment of the same quantity to be sent on April 22. India on Wednesday sent two more fuel consignments to Sri Lanka - 36,000 tons of petrol and 40,000 tons of diesel.

Sri Lankan activists take part in a demonstration outside the US embassy in Colombo.(AFP)
Sri Lankan activists take part in a demonstration outside the US embassy in Colombo.(AFP)

Amid fears Sri Lanka might run out of fuel (again) by the end of this month, officials from both sides are negotiating an increase to the credit line. If the talks are unsuccessful Sri Lanka will only be allowed to reuse the credit line once payments are settled for the purchases already made.

So far India has delivered 270,000 tonnes of fuel to Sri Lanka under its neighbourhood first policy to help it overcome its worst economic crisis in decades. Plummeting reserves of foreign currency - down from $2.31 billion in February to $1.93 in March - have left Sri Lanka with no immediate way of paying of billions in foreign debts or for essentials like food and fuel, prompting massive protests.

The $500 million line of credit for fuel provided by India is in addition to the $2.5 billion provided for purchase of other essentials, like food and medicines.

Sri Lanka is facing its worst economic crisis since gaining independence from the United Kingdom in 1948. The crisis has resulted in scarce supplies of food and fuel, along with record inflation and long blackouts. Rating agencies have warned of a potential default on Sri Lanka's $51 billion foreign debt, and authorities are unable to raise more commercial loans because of credit downgrades.

The public anger has prompted nearly all cabinet ministers to quit, and scores of lawmakers to leave president Gotabaya Rajapaksa's government. Protesters have called on Rajapaksa to resign.

On Thursday, India's ministry of external affairs spokesperson said Sri Lanka is a neighbour and a close friend. He also said that New Delhi is closely watching the developments in the island nation and "stands ready to continue working with Sri Lanka for rapid post-Covid economic recovery."

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