Iran Extends Credit Facility for Oil to Sri Lanka by Another Year

21st September 2009, www.news.lk

The Iranian Government has extended by another year the four month interest free credit facility to Sri Lanka originally granted following President Mahinda Rajapaksa’s visit to Iran in November 2007.

Consequent to talks with Iranian President Dr. Mahmoud Ahmadinejad, the Iranian Government granted the facility beginning January 2008 and ending on August 31, 2009.

In 2008 alone, Sri Lanka imported crude oil under this facility to the tune of US$ 1.05 billion (Rs.110,550 million) nearly all of its requirements, helping release the pressure on the island’s foreign exchange requirements in a year of significance for the Government’s war with the LTTE. Treasury circles have acknowledged this as a substantial rolling facility that helped ward off any financial crisis, last year.

An additional three month credit package at a concessionary rate of interest was also accommodated in Sri Lanka’s favour if the country needed further time. Further to the discussions, Sri Lanka’s Ambassador to Iran M.M. Zuhair had with the Iranian authorities on the instructions of President Rajapaksa, the National Iranian Oil Co. under the oil Ministry of the Islamic Republic of Iran has extended by another year the special facility on the same terms as earlier.

Finance Ministry Secretary Sumith Abeysinghe, and Ceylon Petroleum Corporation Chairman Major General A.B. Thoradeniya coordinated with Sri Lanka’s Ambassador in Tehran. Meanwhile, former Iranian Commerce Minister Mir Kazemi, has been appointed as the new Petroleum Minister.

Mir Kazemi was the Minister in attendance when President Rajapaksa visited Iran. He also accompanied President Ahmadinejad, when the latter visited Sri Lanka in May 2008 on the invitation of President Rajapaksa and inaugurated the Uma Oya Hydro Power and Irrigation Project - the US$ 450 Million project, 85 percent of which is funded by Iran.

During that visit, President Ahmadinejad formally inaugurated the US$1.47 billion Sapugaskanda Refinery Expansion and modernization Project, 70 percent of which has been committed to be financed by Iran.