Sri Lanka to allow foreign companies to import and sell fuel

The island nation is experiencing difficulties with the purchase of fuel due to the economic crisis. Earlier, the Sri Lankan authorities began negotiations with Russian companies to buy oil on credit

Amid the unfolding energy crisis, Sri Lanka will allow companies from oil-producing countries to import and sell fuel on its territory. It is reported by Reuters with reference to the statement of the Minister of Energy of the Republic, Kanchan Wijeseker.

“Approval received from the Cabinet of Ministers for the opening of the fuel import market and retail sales for companies from oil-producing countries”, — said the head of the Ministry of Energy.

Wigesecker also explained that the companies will be selected based on their ability to import fuel and will be able to operate without foreign exchange requirements from the Sri Lankan Central Bank in the first months.

The Sri Lankan government clarified that long-term agreements signed with individual companies in foreign oil-producing countries will allow them to import and sell fuel at their own expense in a way that does not put pressure on the currency situation in the republic.

Sri Lanka has been in an economic and political crisis since the beginning of the year. According to experts, it has become the strongest in the 74 years of the existence of the state. The crisis is caused, among other things, by a shortage of foreign currency that arose due to the restriction of tourist flow due to the COVID-19 pandemic. As a result, the country cannot purchase enough fuel from foreign suppliers. In April, it defaulted on its external debt.

In the spring, mass protests took place in the cities of Sri Lanka. For several months, residents have to stand in lines to buy fuel, food and medicine. Against the backdrop of a lack of first power, it was forbidden to sell it to private individuals until July 10, allowing only the refueling of cars of the main public services.

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In late May, the Russian Foreign Ministry announced that Moscow had received an appeal from Sri Lanka asking for assistance in overcoming the energy crisis. Later, the republic's energy minister clarified that it would pay $72.6 million for 90,000 tons of Russian oil within a few weeks.

June 20, Widgeseker announced that Sri Lanka had begun negotiations with Russia on buying oil on credit. “I have answers from Russian companies, proposed by the Russian ambassador [Yuri Materii]”, — the minister said at the time.

The Adaderana portal clarified that the size of the loan for the purchase of fuel is $90 million. Economy Next notes that by June, Sri Lanka's oil costs had risen to $550 million, in total it owes oil companies $730 million those refuse new deliveries without advances. At the same time, the Central Bank of the country cannot give foreign currency to pay for supplies due to the economic crisis.

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