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Sri Lanka to buy fuel from IOC subsidiary to ward off power problems

Sri Lanka to buy fuel from India (Photo: IANS)

Sri Lanka plans to buy 40,000 metric tons of diesel and petrol each from Lanka IOC (LIOC)–the Sri Lankan subsidiary of the Indian Oil Corporation (IOC).

A government statement said that the energy ministry has held discussions with IOC, which has agreed to supply the fuel. The Sri Lankan cabinet has given the nod to purchase the fuel.

On Tuesday, Power Minister Gamini Lokuge told journalists that the Finance Ministry has held discussions with IOC and the government will pay the firm in rupees.

The island nation is currently facing a severe shortage of fuel for vehicles as well as power outages due to a debilitating foreign exchange crisis. Subsequently, the country has not imported crude oil to feed its refineries and power plants.

Last month, Sri Lanka signed an agreement with India for a $1 billion package to tide over the shortage of food and essential medicines. India also extended an additional $500 million line of credit to its southern neighbour for purchasing fuel from India.

The Sri Lankan government also signed the Trincomalee oil tank farm deal–a joint venture between Sri Lanka, LIOC and the Ceylon Petroleum Corporation for developing the 850-acre oil storage facility in the north-east part of the island. The deal will also strengthen energy security for Sri Lanka in days to come.