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Plans to buy Russian oil hits several snags
View(s):Sri Lanka’s plans to buy oil from Russia continue to be stymied by international sanctions, as foreign banks refuse to open letters of credit (LoC) for purchases from the Federation.
While talks have been held between Sri Lankan leaders and various Russian representatives – including direct discussions between President Gotabaya Rajapaksa and President Vladimir Putin – there is still no solution to the issue of payments.
Sri Lanka is, therefore, compelled to place orders with third parties who may be procuring the oil from Russia. Even so, there is the risk of international banks refusing to underwrite LoCs upon learning of the origin of the fuel.
The fuel shipment of 40,000 MT – that Energy Minister Kanchana Wijesekera recently announced but never arrived – was one such shipment ordered from a supplier registered with the Ceylon Petroleum Corporation, authoritative sources said. An investigation by the Business Times recently revealed that the spot purchasing contract of 40,000 MT was given to the local agent of an international Russian company in Dubai named ‘Laser head’ after considering an unsolicited proposal. After getting the contract, the company changed the name to ‘Laser head India’ and again a second time to ‘Nice company’ when signing the documents.
A confirmed LoC of US$ 42.6 million was opened at People’s Bank by the CPC for the importation of this shipment, official documents revealed. No one knows what has happened to it. Sri Lanka did not make a disbursement for the consignment.
Any payments to be made for Russian oil will have to take a complicated route.
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