Iranian help for faster economic development

The Cabinet has granted its approval to a Memorandum submitted by President Mahinda Rajapaksa, who is also the Minister of Finance and Planning, on his recent State Visit to Iran.

During the visit it was possible to finalise assistance from the Iranian Government for several areas of importance to Sri Lanka's economic development.

They include a credit facility for crude oil, long-term financial assistance for the implementation of Uma Oya Multi-purpose Development Project, assistance for the expansion of Sapugaskanda Refinery and, several bilateral arrangements to promote investment, trade and tourism.

The Iranian Government agreed to provide a four-month interest free credit facility in the range of US $ 360-400 million and US$ 632-700 for seven months.

The Uma Oya irrigation/hydro electricity project is one of the important development projects to divert water to the Southern Province. The estimated cost of this project, which will start in March 2008, is around US$ 450 million.

The Sapugaskanda refinery has the capacity of producing 50,000 barrels per day of refine products from crude oil. This meets approximately 45 per cent of the domestic demand. To meet the full domestic demand it has been considered desirable to increase the capacity to 100,000 barrels a day and modernising the existing refinery to improve the quality of refined products.

It is estimated that approximately US$ 600-700 million is required for this project. Several MoUs were signed in respect of Customs arrangement, tourism, trade and private investment through the Board of Investment and other private sector Chambers.

This was extremely beneficial for Sri Lanka's economic development and financial stability.

Considering the large trade deficit of Sri Lanka-Iran Trade, Iran has also agreed to permit Sri Lankan exports to Iran. In this context, export of tea has tremendous potential and Sri Lanka will benefit immediately, the President has pointed out.