Sri Lanka’s decision to reject the request of allocating an offshore block in the Mannar Basin for oil exploration instead of the interest payments for a US$ 3.6 billion credit line by the Omani government has put this loan facility in the balance, reliable official sources said. The Cabinet of Ministers approved a proposal recently [...]

Business Times

Oman’s $3.6 b loan to CPC hangs on the balance

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Sri Lanka’s decision to reject the request of allocating an offshore block in the Mannar Basin for oil exploration instead of the interest payments for a US$ 3.6 billion credit line by the Omani government has put this loan facility in the balance, reliable official sources said.

The Cabinet of Ministers approved a proposal recently to enter into a loan agreement for a $3.6 billion loan with the Government of Oman to fund oil procurement for year. Cabinet Co-Spokesperson and Plantation Minister Dr. Ramesh Pathirana told the Cabinet news briefing that the two parties reached an agreement on the $3.6 billion loan in principle.

But he noted that the government has not taken a decision on the allocation of a block at Mannar basin as requested by Oman in lieu of interest payments of their credit line.

However this decision is still to be informed officially to the government of Oman although the loan agreement has been prepared and finalised, a senior official of the Energy Ministry said.

The relevant agreement is to be presented to the Cabinet within two weeks he said adding that all the necessary documents on the contract should be submitted to Omani authorities to follow their complex procedure of funding.

The terms of the draft agreement would provide the Government of
Sri Lanka a five-year grace period and a repayment period spanning 20 years.

The $3.6 billion credit line will enable Ceylon Petroleum Corporation (CPC) to procure fuel for 12 months, he disclosed. The country’s monthly oil bill is around $300 million. Negotiations with India on the $500 million credit line are continuing and it is expected to enter into an agreement soon, he revealed.

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