ECONOMYNEXT – Sri Lanka’s Treasury has imposed a tax of 50 rupee per liter of fuel to collect money to pay nearly $1 billion credit obtained by the state-run Ceylon Petroleum Corporation (CPC) and the new tax scheme will remain in place for at least next 12 months, Energy Minister Kanchana Wijesekara said.
Sri Lanka has to pay $251 million to Iran, as per Tehran officials, for the crude shipments it bought before 2012 US sanctions while it has to pay $700 million for the oil imports under the Indian Credit line after the country announced bankruptcy.
Minister Wijesekera said the tax was 25 rupees per liter in June and has now been increased to 50 from this month.
“What we have to recover is $700 million – that is due to the Indian credit line – what we have purchased as fuel. And there is another recovery process for the Iranian suppliers that we have obtained early part of 2000, which amount to roughly about $300 million,” Wijesekera told reporters at a media briefing in Colombo on Tuesday
“Those are the two largest suppliers that we have to pay back. So the treasury will recover that money through the tax scheme which we think will be implemented for the next 12 months. Once recovered, once the treasury says required money is recovered, then we can reduce tax.”
The Minister said he was unaware of the amount so far recovered from the latest tax.
Sri Lanka has already signed a deal with Iran to pay the crude due through supply of tea. Wijesekara said the amount collected from the tax will be given to the Plantation Ministry.
“The tax is to pay the local tea suppliers. It is not paid directly to the Iranian government. The CPC will pay the plantation ministry. Plantation ministry will pay to the tea suppliers who provide tea for Iran,” he said. (Colombo/July 04/2023)