By Saman Indrajith

Minister of Power and Energy Kanchana Wijesekera told Parliament on Friday that the government had made two amendments to the agreements between Sri Lanka and its new fuel suppliers.The first amendment pertains to the immediate conversion of their earnings here from fuel sales to US Dollars. Previously, it was mandated that these funds be maintained as LKR for nine months before conversion to Dollars. However, the Central Bank of Sri Lanka (CBSL) now recommends the immediate conversion of rupees to Dollars, with the funds being kept in an account for a period of one year.

Only the conversion of Rupees into Dollars is allowed immediately, while the repatriation of funds will still be subject to a 12-month period, he said. The original condition requiring funds to remain in Sri Lanka for 12 months still stands, he said.

Minister Wijesekera explained that converting bulk amounts after a nine-month period could create significant pressure on foreign reserves and potentially lead to exchange rate fluctuations.

The second amendment relates to the imposition of a 50 rupee tax per litre of fuel, which replaces the initial proposal of a one percent royalty fee on suppliers. The Ministry of Finance introduced the Rs. 50 tax before the implementation of the royalty fee, prompting its withdrawal. Minister Wijesekera emphasized the need to avoid double-taxation on consumers, as the existing tax would already impact suppliers and subsequently affect consumers. As a result, the 1 percent royalty fee was removed, Wijesekera said.

However, the Minister assured that the 50 rupee collected from suppliers would still be utilized to recover payments made for the Indian Line of Credit (LoC) and the funds obtained from Iran in 2000.