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Sri Lanka turns to Putin for urgent credit to import fuel  

Meera Srinivasan | | Updated on: Jul 06, 2022
Sri Lankan President Gotabaya Rajapaksa

Sri Lankan President Gotabaya Rajapaksa | Photo Credit: DINUKA LIYANAWATTE

Govt suspending fuel sales for two weeks to cope with the shortage

Sri Lankan President, on Wednesday, reached out to his Russian counterpart Vladimir Putin, seeking urgent credit for fuel imports for the crisis-hit island nation, even as Colombo negotiates a support package with the Washington-headquartered International Monetary Fund.      

“Had a very productive telecon with the #Russia President, Vladimir Putin. While thanking him for all the support extended by his gvt to overcome the challenges of the past, I requested an offer of credit support to import fuel to #lka in defeating the current econ challenges,” Gotabaya said in a tweet. 

Sri Lanka ran out of fuel last week, and the government said it was suspending fuel sales for two weeks to cope. An aide of a Prime Minister has indicated that supplies will likely arrive by July 22, while hundreds wait for days together in long queues to petrol stations.  Colombo earlier dispatched its ministers to Qatar and Russia to seek help. Scrambling for dollars for essential imports, the government is counting on credit lines from one of its bilateral partners. However, after Colombo opted for a preemptive sovereign default in April this year, global oil firms are less forthcoming with credit. 

India, as part of its $ 3.5 billion assistance this year, earlier extended a $500 million credit line for fuel imports, and Sri Lanka has sought further credit. However, it appears that any future assistance from most bilateral partners will depend on Sri Lanka firming up its debt restructure strategy, and the IMF’s Extended Fund Facility coming through. 

Optics of outreach 

Apart from seeking credit for fuel, Mr. Gotabaya also requested Mr. Putin to resume operations of Russia’s national carrier to the island nation, suspended following a diplomatic spat last month. Colombo, based on a court order in a commercial dispute, detained a Russian aircraft, leading to a “resolute protest” from Moscow. The court later revoked the order, but Russia’s subsequent decision to suspend operations resulted in a high number of tourist cancellations, local media reported.    

“Further, I humbly made A request to restart @Aeroflot_World operations in #lka. We unanimously agreed that strengthening bilateral relations in sectors such as tourism, trade & culture was paramount in reinforcing the friendship our two nations share,” Mr. Rajapaksa said in the twitter thread. 

His request to resume operations of the Russian carrier may have further diplomatic consequences, amid other geopolitical tensions.  In March this year, Aeroflot announced suspension of its international operations, as western manufacturers, lessors, and repair companies implemented sanctions in the wake of Russia’s war on Ukraine. In Sri Lanka, the European Union has earlier raised concern with Sri Lanka’s Civil Aviation Authority over allowing Aerofloat operations, citing questions over its “air-worthiness”,  The Hindu reliably learns.    

Meanwhile, Sri Lanka is struggling to respond to its crippling economic downturn. Even ongoing negotiations with the IMF appear challenging, going by Prime Minister Ranil Wickremesinghe’s remarks in Parliament on Tuesday. “We are now participating in the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation than previous negotiations,” he said. 

Meera Sreenivasan is The Hindu Correspondent in Colombo

Published on July 06, 2022
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