ECONOMYNEXT – Sri Lanka President Gotabaya Rajapaksa on Wednesday called Russian leader Vladimir Putin and requested for fuel credit after a recent diplomatic spat between the two nations.

“Had a very productive telecon with the Russia President, Vladimir Putin. While thanking him for all the support extended by his government to overcome the challenges of the past, I requested an offer of credit support to import fuel to Sri Lanka in defeating the current economic challenges,” President Rajapaksa tweeted.

“Further, I humbly made A request to restart @Aeroflot_World operations in Sri Lanka. We unanimously agreed that strengthening bilateral relations in sectors such as tourism, trade & culture was paramount in reinforcing the friendship our two nations share.”

Had a very productive telecon with the #Russia President, Vladimir Putin. While thanking him for all the support extended by his gvt to overcome the challenges of the past, I requested an offer of credit support to import fuel to #lka in defeating the current econ challenges.

— Gotabaya Rajapaksa (@GotabayaR) July 6, 2022

President’s call came after Sri Lanka’s action on detaining Russian aircraft Aeroflot in Colombo early in June had angered Russia, which later has threatened to halt bilateral trade and flight services to Sri Lanka, government officials have said.

Russia is one of the top buyers of Sri Lankan tea, the country’s top agricultural commodity export which fetches around $1.5 billion export revenue.

Sri Lanka also has been in the process to get Russian crude oil to manage the fuel crisis in the island nation. Thousands of motorists wait in queues for weeks to obtain limited fuel stocks in Sri Lanka as it has run out of dollars to import fuel.

Sri Lanka before April had 90-day and 180-day fuel credits to purchase fuel. The state-run fuel retailer Ceylon Petroleum Corporation has to pay only after the agreed grace period.

However, since Sri Lanka declared sovereign debt default on April 12, many oil firms are reluctant to extend credit to Sri Lanka amid foreign banks have rejecting to be the counterpart to open letter of credit for Sri Lankan buyers.

As a result, the $84.5 billion economy is forced to pay the money upfront when ordering the fuel shipments, the power and energy ministry officials say.

Sri Lanka managed limited fuel stocks from a $700 million credit line from India which exhausted with the last shipment on June 16.

Sri Lanka’s efforts to secure fuel credits from the Middle Eastern countries have failed as some countries have said they will help only after an IMF deal is signed.

Mahindananda Aluthgamage, who is a presidential advisor now, last week said President Rajapaksa called Putin last week without giving much details.

Related: Sri Lanka President calls Russia’s Putin, to visit UAE to seek fuel – Aluthgamage

The Aeroflot flight was detained following a court order obtained by Celestial Aviation Trading 10 Limited of Ireland, the owner of the aircraft, against Aeroflot in a Colombo court, over a lease dispute.

Russia has sought an assurance from the Sri Lankan government of not repeating the diplomatic spat it followed including the legal action after grounding an aircraft operated by Russia’s Aeroflot in Colombo, former president Maithripala Sirisena told the parliament this week.

Related: To resume flights, Russia has sought SL assurance of not repeating Aeroflot action-Sirisena

Government officials are divided on the way Aeroflot issue was handled. Some say the government should have sought diplomatic channels while others say it was a legal issue hence the way it was handled was appropriate.

On 2 June 2022, the Commercial High Court of the Western Province issued an enjoining order on the Aeroflot flight restraining it from taking off from Sri Lanka’s main airport near Colombo.

Later the Sri Lankan Court suspended an order preventing the Aeroflot flight from leaving Sri Lanka. The order was suspended after the Colombo Commercial High Court considered a motion filed by the Attorney General.

The Airbus A330-343 operated by Russian state-owned airline Aeroflot was denied permission to fly to Moscow as scheduled on June 2nd amid a legal dispute with a leasing company. The flight had more than 200 passengers onboard. (Colombo/July 06/2022)