ECONOMYNEXT – Sri Lanka’s Energy and Energy Minister has revealed “multiple” reasons why state-owned Ceylon Petroleum Corporation continues to operate under losses for years.
Power and Energy Minister Kanchana Wijesekara in an August 5 Twitter post said there were multiple reasons why the CPC was operating at a loss, with selling at subsidized rates, depreciation of the rupee, dues from government-owned institutes and overpaid, inefficient and overstaffed staff. important reasons.
In April 2022, before the new pricing formula was put in place, former CPC Chairman Sumith Wijesinghe said that the CPC was losing between 800 and 1 trillion rupees per day due to rising world prices and unrevised prices in the country.
The rapid depreciation of the Rupee in the country, as the Central Bank decided to float the Rupee when it was at 203 against the US Dollar, further aggravated the CPC’s loss.
Minister Wijesekara said that due to the depreciation of the rupee, the refund rate has increased to 367-390 rupees against the USD for purchases made at 203 rupees.
CPC provides fuel for transport services in the country, including the Board of Transport, Department of Railways and Sri Lankan Airlines, while also providing fuel to the Ceylon Electricity Board for thermal power generation.
Sri Lankan airline dues of US$300 million and CEB 60 billion rupees also contribute to CPC losses.
Wijesekara said high premiums, demurrage and interest charged by banks in the face of the current economic crisis also contributed to the company’s losses.
With the purchase of crude oil stopped, the Sapugaskanda refinery closed several times in 2021 and early 2022.
Even though the refinery is back in operation, it is not operating at full capacity, Wijesekara said, and increased reliance on high-cost finished products in the global market has also contributed to CPC’s losses.
Wijesekara pointed to a 25% pay rise on a collective bargaining agreement since 2012 for bloated and inefficient CPC staff as another factor in the company’s losses.
With the price revisions that have taken place in the recent past, service prices have increased rapidly in all sectors. Private sector oil transporters have repeatedly pulled out of fuel distribution demanding a price increase, and Wijesekara said the overall cost of distribution has risen significantly for the CPC.
(Colombo/ August 5, 2022)