Considering that Sri Lanka owes more than $50 billion in foreign debt, it remains uncertain how it compensated for the Russian crude. But the deal has been done as Russian oil is saving Sri Lanka from an energy crisis.
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The biggest financial crisis Sri Lanka has ever faced has stemmed from a foreign exchange shortfall, with shortages of everything from food to crude oil. Fuel supplies are running out, retailers are out of food, and social-economic pandemonium has erupted across the South Asian island nation.
However, there is some promise in the short term, as the bankrupt nation managed to pay for a consignment of Russian crude.
According to Bloomberg, Ceylon Petroleum Corp., the country’s sole refinery, will receive Russian grade Siberian Light on May 28. In two months, the refinery will process crude to generate high-value commodities like gasoline and diesel for the first time.
The island nation’s fuel supplies are so limited that the administration has advised inhabitants to avoid standing in huge queues at petrol stations. The government has depleted its foreign reserves, leaving it unable to pay for crucial imports.
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Ranil Wickremesinghe, the newly-appointed Prime Minister, stated last week that his government required $75 million for crucial imports such as crude.
The Nissos Delos tanker transporting Siberian Light has moved near a mooring site where it may begin discharge operations, according to ship monitoring data gathered by Bloomberg. The ship arrived in Novorossiysk, a Black Sea port city in southern Russia, on March 29.
Given that Sri Lanka owes more than $50 billion in foreign debt, Bloomberg was unsure how it compensated for the Russian crude. It is asking the IMF for a $4 billion loan and has requested China to renegotiate at least $3.5 billion in debt.
China has announced a loan of a few hundred million dollars to help ease a critical supplies shortfall.
Sri Lanka may have to pay for the Russian crude in this way.