China grants $90m to Sri Lanka for rural development projects

Sri Lanka's Prime Minister Mahinda Rajapaksa (R) and Director of the Central Foreign Affairs Commission Office Yang Jiechi pose for a picture before a meeting in Colombo on October 9, 2020. (AFP)
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Updated 12 October 2020

China grants $90m to Sri Lanka for rural development projects

  • China considers Sri Lanka to be a critical link in its massive ‘Belt and Road’ global infrastructure building initiative

COLOMBO: China announced on Sunday that it was providing a $90 million grant to Sri Lanka, two days after the island nation’s president sought help from a visiting Chinese delegation in disproving a perception that China-funded megaprojects are “debt traps.”

Calling the financial assistance a “timely grant,” the Chinese Embassy in Colombo said that it would be used for medical care, education and water supplies in Sri Lanka’s rural areas and that it would “contribute to the well-being of (Sri Lankans) in a post-COVID era.”

The announcement follows a visit to the Indian Ocean island nation on Friday by a Chinese delegation led by Yang Jiechi, a Communist Party Politburo member and a former foreign minister.

During talks with Yang, Sri Lankan President Gotabhaya Rajapaksa asked China to help him in disproving a perception that China-funded megaprojects are “debt traps” aimed at gaining influence in local affairs.

China considers Sri Lanka to be a critical link in its massive “Belt and Road” global infrastructure building initiative and has provided billions of dollars in loans for Sri Lankan projects over the past decade. The projects include a seaport, airport, port city, highways and power stations.

In 2017, Sri Lanka leased out a Chinese-built port located near busy shipping routes to a Chinese company for 99 years to recover from the heavy burden of repaying the Chinese loan the country received to build it.

The facility is part of Beijing’s plan for a line of ports stretching from Chinese waters to the Persian Gulf. China has also agreed to provide a $989 million loan to Sri Lanka to build an expressway that will connect its tea-growing central region to the Chinese-run seaport.

China expanded its footprint in Sri Lanka during the leadership of former President Mahinda Rajapaksa, the older brother of the current leader.


WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

Updated 24 January 2021

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

Oil prices have been stable since early January, with Brent crude price hovering around $55. Brent crude closed the week slightly higher at $55.41 per barrel,
while West Texas Intermediate (WTI) closed slightly lower at $52.27 per barrel.

Oil price movement since early January in a narrow range above $50 is healthy, despite pessimism over an increase in oil demand, while expectations of US President Joe Biden taking steps to revive energy demand growth are
still doubtful. The US Energy Information Administration (EIA) reported a hike in US refining utilization to its highest since March 2020, at 82.5 percent. The EIA reported a surprise weekly surge in US commercial crude stocks by 4.4
million barrels. Oil prices remained steady despite the bearish messages sent from the International Energy Agency (IEA), which believes it will take more time for oil demand to recover fully as renewed lockdowns in several countries weighed on oil demand recovery.

The IEA’s January Oil Market Report came as the most pessimistic monthly report among other market bulletins from the Organization of the Petroleum Exporting Countries (OPEC) and EIA. It forecast oil demand will bounce back to 96.6 million bpd this year, an increase of 5.5 million bpd over 2020 levels.

Though the IEA has lowered its forecast for global oil demand in 2021 due to lockdowns and vaccination challenges, it still expects a sharp rebound in oil consumption in the second half of 2021,
and the continuation of global inventory depletion.

The IEA reported global oil stocks fell by 2.58 million bpd in the fourth quarter of 2020 after preliminary data showed hefty drawdowns toward the end of the year. The IEA reported OECD industry stocks fell for a fourth consecutive month at 166.7
million barrels above the last five-year average. It forecast that global refinery throughput is expected to rebound by 4.5 million bpd in 2021, after a 7.3 million bpd drop in 2020.

The IEA monthly report has led to some short term concern about weakness in the physical crude spot market, and the IEA has acknowledged OPEC’s firm role in stabilizing the market.

Controversially, the IEA believes that a big chunk of shale oil production is profitable at current prices, and hence insinuated that shale oil might threaten OPEC market share.

It also believes that US shale oil producers have quickly responded to oil price gains, winning market share over OPEC producers. However, even if US shale oil drillers added more oil rigs for almost three months in a row, the number of operating rigs is still less than half that of a year ago, at 289 rigs.

The latest figures from the Commodity Futures Trading Commission show that crude futures “long positions” on the New York Mercantile Exchange are at 668,078 contracts, down by 18,414 contracts from the previous week (at 1,000 barrels for each contract).