Sri Lanka rejects Oman land-for- interest request in US$3.6bn oil supplier’s credit: Minister

ECONOMYNEXT – Sri Lanka has rejected a request by Oman to grant them an area to look for oil in lieu of interest payments on 3.6 billion US dollar credit line, Co-Cabinet spokesman Ramesh Pathirana said.

The 3.6 billion US dollar credit line had been discussed by the cabinet of ministers.

“What we understand is that they have made such a request in relation to allocation of land for the investigation of oil reserves in Sri Lanka,” Pathirana told the weekly cabinet press briefing responding to a question from EconomyNext

“In the particular cabinet decision there was no agreement in relation to this land claim.

“It’s only the loan agreement that we have reached for 3.6 billion US dollars over a period of one year for the procurement of oil for Sri Lanka. We have not taken a decision as such. So It is only the interest payments.”

India’s Cairn found traces of natural gas in the Mannar basin off Sri Lanka northwestern coast but the resource was not deemed commercially viable at that time.

However LNG prices in Asia has rocketed in recent months as the US Federal Reserve Chief Jerome Powell printed money.

The Powell Bubble has also pushed up base metals, precious metals and food in a broad-based commodity boom, the worst seen since the Greenspan-Bernanke bubble broke in 2008.

Sri Lanka has also printed money over 2020 and 2021 in monetary ‘stimulus’ after cutting taxes in a ‘fiscal’ stimulus.

Every time Sri Lanka’s central bank prints money and creates forex shortages, state-run Ceylon Petroleum Corporation borrows dollars instead of buying from market and runs an un-hedged foreign exchange position, widening the current account deficit.

When the currency ultimately collapses, the utility runs massive losses. In a 2018 money printing bout the CPC ran an 80 billion rupee forex loss on dollar loans and suppliers credit despite market pricing oil.

The CPC had run up about 3.0 billion US dollars in loans up to July 2021, parliament had been told.

Sri Lanka is also in discussion with India for a 500 million US dollar oil credit line. (Colombo/Oct06/2021)