India gives Sri Lanka $500 loan to pay for oil

New Delhi : Sri Lanka has been given a temporary relief from energy shortages as India gave a $500 million loan to make urgent oil purchase for the cash-strapped country.

The nation's economic woes have left thermal plants starving for oils to keep themselves running and keep providing electricity.

Frequent breakdowns at a huge coal power plant has resulted in long and unannounced power cuts. Households are also struggling to get cooking gas and kerosene.

Officials have signed a formal agreement after two weeks of talks, in addition to a recent $915 million in foreign exchange support.

An Indian diplomat said talks were underway on another $1 billion credit line to fund urgently needed food and medicine imports from India.

"The $500 million is for Sri Lanka to purchase petroleum products from Indian suppliers," the official said.

Sri Lanka is also dealing with shortage in food supplies, car manufacturing parts and cement. Amid this the food inflation has rose to a record 25 per cent.

Tourism is a key foreign exchange earner for Sri Lanka but the sector has collapsed in the wake of the Covid-19 pandemic.