Sri Lanka Secures US$7 m Credit Facility for Oil Imports from Iran

A00578173.jpgTEHRAN (Fars News Agency)- The Sri Lankan Government was able to secure seven months credit facility to import crude oil from Iran following President Mahinda Rajapaksa’s State visit to Tehran, a senior official said in Colombo on Thursday.

Iran pledged aid totaling US$ 1.5 billion to Sri Lanka during the President’s visit, Treasury Secretary Dr. P.B. Jayasundera told the Daily News.

Jayasundera said that 70 per cent of the total local crude oil requirement, amounting to US $ 700 million, is fulfilled by Iran. “However, if we purchase oil at today’s world market price (US$ 95-100 for a barrel) our oil bill will exceed more than US$ one billion.”

Therefore, the Iranian Government has extended a seven-month credit facility which amounts to US$ 7 million. Iran has also considered a four month credit line and a further three month credit with concessionary terms, which is a big relief to Colombo at this juncture, Jayasundera said.

Sri Lanka will also be able to save US$ 1 million a year with the removal of certain regulations like Letters of Credit by the Iranian Government, Jayasundera said.

The high import duty levied by Iran on Sri Lankan tea exports will be removed following discussions between President Rajapaksa and Iranian President Mahmoud Ahmadinejad during his visit, Jayasundera added.

Since Iran purchases 30 million Kg of tea annually from Sri Lanka which accounts for 10 per cent of the total tea exports, it will benefit the tea industry immensely, he said. Sri Lanka will get more opportunities to export value-added tea. With this trade facilitation between two countries, the exchange rates are expected to strengthen and stabilize.

The exchange rate has now stabilized at Rs 110 from Rs 114 per US dollar, he said.

Check Also

Ripple effects from drone sales force Turkey to move Ethiopian embassy

Turkey was forced to relocate its Ethiopian embassy to Kenya after increasing threat out of …