Oil imports SL looking at long-term credit from producers
The Sri Lankan Government is looking at Government-to-Government (G to G) Agreements when purchasing crude oil on a long-term credit basis from Middle Eastern and Russian Oil produces.
According to Ceylon Petroleum Corporation Chairman, Sumith Wijesinghe, the Government is aiming to explore the possibility of securing Government-to-Government deals on crude oil importation.
He said, such agreements would enable the country to enjoy concessionary rates as well as longer credit periods.
At present, Ceylon Petroleum Corporation purchases crude oil from foreign traders and suppliers on a 180-270-day credit period.
According to him, due to purchasing on credit, though Sri Lanka is enjoying some concessionary rates, the final price was much higher.
Further, the rapid depreciation of the Sri Lankan rupee as against most currencies was weighing on the CPC as the country has kept its retail prices fixed.
The previous regime attempted to rectify the matter by introducing a fuel pricing formula which took place every month. However, the present regime scrapped the system.
Treasury Secretary S.R. Attygalle recently told local Media that the Government was aiming to increase the credit period to at least one-year so that CPC would have some breathing space.
According to him, deals are being discussed with Saudi Arabia, Qatar, Kuwait, Oman, the United Arab Emirates and Russia, with Iranian oil now being difficult to source due to the US sanction.
It was reported that a high- powered Sri Lankan delegation was on a visit to the Middle Eastern nations to discuss the opportunities of such a deal.
In 2020, Sri Lanka imported refined petroleum products worth US$ 1,742 million, down 35 per cent from US$ 2.7 billion in 2019, while Crude imports cost US$ 583 million, down 39 per cent from US$ 970 million in 2019.
Last year, oil importation bill was lower due to lockdowns imposed following the COVID-19 pandemic and work-from-home implementations as well as the reduced global oil prices.