Sri Lanka negotiates with UAE on oil credit line deal
View(s):Sri Lanka is exploring the possibility of entering into a long term credit line deal with the United Arab Emirates (UAE) to import crude oil and refined petroleum directly from that country with the aim of meeting the present fuel requirement.
This was highlighted during talks between United Arab Emirates’ Ambassador to Sri Lanka Sheikh Ahmed Ali Hamad Al Mualla and the Minister of Energy Udaya Gammanpila recently focusing attention on this matter which arose due to the dollar scarcity.
Preliminary discussions on the modalities of long term oil credit line took place between Minister Gammanpila and Acting head of the UAE mission Saif Yusuf on Monday, Energy Ministry sources said.
The meeting focused on how Sri Lanka could proceed with the import of crude oil directly from the UAE on concessionary terms amidst the dollar shortage.
In addition, the two parties agreed to sign a Memorandum of Understanding between the two countries to enhance energy cooperation.
Minister Gammanpila in a Twitter message stated that currently there was no shortage of fuel and all measures have been made to arrange the arrival of oil shipments placing orders with international suppliers after awarding long term contracts.
The cash strapped Ceylon Petroleum Corporation (CPC) has awarded a long term contract to M/s Conscio Ltd, Nigeria to import Murban Crude Oil for nine months after receiving cabinet approval recently.
Oasis Enterprises (Pvt) Ltd. of Singapore has been awarded another long term contract to supply 92 octane petrol while Petro China Company in Singapore has been given a contract to supply 92 octane petrol, super diesel and diesel for a period of eight months.
Normally when purchasing fuel, 300,000 barrels of fuel are imported in bulk stock while shipping charges are evenly distributed over the 300,000 barrels.
However, as the short term tender is being limited to just 170,000 barrels, it could lead to higher fuel prices as the shipping charges are distributed among a lesser number of barrels, petroleum industry sources said.
In the case of long-term tenders, it takes two weeks to submit a bid and one month to import the oil stocks. However; the short-term tender has been given five days to bid and 15 days to import 92 octane petrol.