Sri Lanka Cannot Pay Says Ministry
By Indika Sri Aravinda
The Petroleum Resources Ministry says it was compelled to rethink a Memorandum of Understanding (MOU) signed with Iran to expand the Sapugaskanda oil refinery owing to lack of funds.
Iran and Sri Lanka inked the MOU in 2008 but Sri Lanka was recently accused of violating the agreement forcing Iran to suspend the project.
The US dollars 1800 million MOU was to see Iran invest 70 percent of the funds for the project while Sri Lanka had to invest the rest.
Under the MOU Sri Lanka had to spend US dollars 525 million and the foundation stone was also laid in 2008 for the expansion project.
When The Sunday Leader contacted Petroleum Resources Ministry Secretary Mrs. Sandya Wijeybandara, she said that Sri Lanka was unable to meet the financial commitments for the project.
She said that it was a huge burden on the economy and as a result the project had to be put on hold. However Petroleum Resources Trade Union Alliance Secretary Ananda Palitha said that one of the reasons Sri Lanka could not meet the financial commitment for the project was because the government had violated the hedging deal and foreign banks subsequently refused to lend Sri Lanka funds.
He added that the government could however have looked at alternatives but was using its funds for other purposes.