Colombo : The Sri Lankan Cabinet has approved seeking a 500 million dollar loan from the Exim Bank of India for the purchase of petroleum products amid a severe foreign exchange crisis in the island nation.
It had already received 500 million dollars from the Exim Bank of India and another 200 million from the State Bank of India for oil purchases.
Crisis-hit Sri Lanka on Tuesday raised the petrol price by 24.3 per cent and diesel by 38.4 per cent, a record hike in fuel prices amidst the country’s worst economic crisis due to the shortage of foreign exchange reserves.
With the second fuel price hike since April 19, now the most-used Octane 92 petrol would cost 420 rupees (USD 1.17) and diesel 400 rupees (USD 1.11) a litre, an all-time high.
The decision to raise the Octane 92 petrol price by 24.3 per cent or 82 rupees and diesel by 38.4 per cent or 111 rupees per litre was taken by the state fuel entity, Ceylon Petroleum Corporation (CPC).
Meanwhile, the auto-rickshaw operators said they would raise the tariff to be 90 rupees per first kilometre and 80 rupees for the second onwards.
As a measure to mitigate the costs, the government announced that the heads of institutions would be given the discretion over which employees would be essential to report physically.
The rest be allowed to work from home. Lanka IOC has been in operation in Sri Lanka since 2002. Sri Lanka has been mulling different options to facilitate measures to prevent fuel pumps from going dry, as the country faces a severe foreign exchange crisis to pay for its imports.
The island nation is grappling with an unprecedented economic turmoil, the worst since its independence from Britain in 1948.
It is struggling with a shortage of almost all essentials, due to the lack of dollars to pay for the imports.
A crippling shortage of foreign reserves has led to long queues for fuel, cooking gas and other essentials while power cuts and soaring food prices heaped misery on the people.
The economic crisis has also triggered a political crisis in Sri Lanka and a demand for the resignation of President Gotabaya Rajapaksa.
The crisis has already forced prime minister Mahinda Rajapaksa, the elder brother of the president, to resign on May 9.
An inflation rate spiralling towards 40 per cent, shortages of food, fuel and medicines and rolling power blackouts have led to nationwide protests and a plunging currency, with the government short of the foreign currency reserves it needed to pay for imports.