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In a bid to address the forex crisis and ensure a steady supply of fuel, Sri Lanka on Thursday signed a deal with an American oil firm, allowing it to become the fourth player in the island nation's fuel retail business, which used to be a state monopoly.
According to a statement, the US firm, RM Parks, in collaboration with Shell, will be involved in a long-term contract for the importation, storage, distribution and sale of petroleum products.
An agreement was signed on Thursday at the Presidential Secretariat, between the Government of Sri Lanka and RM Parks Inc., a prominent international company operating in collaboration with Shell, marking a significant step towards securing a long-term contract for the importation, storage, distribution, and sale of petroleum products in the country.
This development comes after the Ministry explored various strategies to overcome the challenges posed by the foreign exchange crisis and guarantee a continuous fuel supply to consumers, an official statement said.
The Ministry of Power and Energy, Sri Lanka took the decision to ensure uninterrupted fuel supply in the island nation.
RM Parks Inc., in collaboration with Shell, aims to commence operations in Sri Lanka within 45 days after the issuance of the license. According to local media reports, this agreement marks a significant milestone in ensuring a reliable and uninterrupted supply of fuel to meet the country's energy needs amid challenging economic circumstances.
The statement said the current economic situation hindered the state Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Company (LIOC) from importing fuel shipments as planned.
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Insufficient foreign exchange when opening Letters of Credit and settling bills has exacerbated the issue.
The Ministry, having sought solutions to mitigate these challenges, had invited Expression of Interest (EOIs) from reputable petroleum companies.
In mid-May, the Chinese company Sinopec Fuel Oil Lanka (Private) Limited was awarded a similar contract following successful negotiations.
RM Parks Inc., in collaboration with Shell, aims to commence operations in Sri Lanka within 45 days after the issuance of the license.
This agreement marks a significant milestone in ensuring a reliable and uninterrupted supply of fuel to meet the country's energy needs amid challenging economic circumstances.
Debt-ridden Sri Lanka is still struggling to normalise its crisis-hit economy after it declared its first-ever debt default in April last year.
In April 2022, Sri Lanka declared its first-ever debt default, the worst economic crisis since its independence from Britain in 1948, triggered by forex shortages that sparked public protests.
The shortage has hampered the import of fuel and other essentials in the country reeling under the worst economic crisis in seven decades.
Months-long street protests led to the ouster of the then-president Gotabaya Rajapaksa in mid-July. Rajapaksa had started the IMF negotiations after refusing to tap the global lender for support.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
