The country's top refiner and fuel retailer, Indian Oil Corporation Limited (IOCL) told the media that it will supply 12-13 fuel cargoes to Sri Lanka to aid the island nation's energy crisis.

Over the next 4-5 months, IOC plans to supply gasoil, gasoline, and jet fuel to Sri Lanka. The supplies will be made possible by a $500 million line of credit (LOC) extended to Sri Lanka by the Indian government for the purchase of fuels.

Sri Lanka signed a lease agreement with Lanka IOC, a local unit of Indian Oil Corp, to lease 75 oil tanks on Thursday, moving the island closer to securing a $500 million fuel credit line from India.

The agreement was signed ahead of Chinese Foreign Minister Wang Yi's visit to Colombo this weekend, as China vies for influence in Sri Lanka.

Sri Lanka is experiencing one of its worst financial crises in decades, with foreign exchange reserves dwindling and debt repayments totalling nearly $4.5 billion due in 2022, prompting it to look for new ways to bring in foreign exchange.

Sri Lanka had previously agreed to lease all 99 of its tank oil farms to India in 2003. According to the new agreement, Lanka IOC will lease 14 tanks for 50 years, while Trinco Petroleum Terminal Pvt Ltd, a joint venture (JV) with the state-run Ceylon Petroleum Corporation (CPC), will develop 61 oil farms. The remaining 24 tanks will be used by CPC.

Since 1987, successive Indian and Sri Lankan governments have tried to split ownership and development of a World War II-era tank farm at Trincomalee, a strategically important harbour of the island's scenic east coast.

Sri Lanka is on a shipping route connecting Gulf oil exporters with Asian consumers, and Trincomalee was a vital Allied supply hub during World War Two.

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