Kanchana admits consumers charged Rs. 50 per litre of fuel to settle USD 700 mn Indian loan

… USD 5 mn paid to Iran a month

By Shamindra Ferdinando

Power and Energy Minister Kanchana Wijesekera has confirmed that consumers of petrol and diesel have been made to pay Rs. 50 to Rs. 55 per litre since the middle of last year to settle what the Ceylon Petroleum Corporation (CPC) owed its creditors.

Minister Wijesekera said so when Chamuditha Samarawickrema raised the issue on ‘Salakuna’ live political programme on Hiru TV recently.

SJB trade unionist Ananda Palitha disclosed the CPC move in an interview with The Island recently. The former UNP trade union leader said that a litre of petrol 92 cost Rs. 366, Octane 95 Rs. 464, Auto Diesel Rs. 358 and Super Diesel Rs. 475 because the CPC passed its debt on to consumers. A litre of Kerosene is sold at Rs. 236.

Wijesekera said: “CPC owed USD 730 to suppliers. In addition, the CPC owed the two State Banks – Bank of Ceylon and People’s Bank Rs 199 bn. Under the Indian credit line, the CPC procured petroleum products to the tune of USD 700 mn from April to August 2022. We also owe Iran USD 240 mn as payments couldn’t be made due to international sanctions that had been in place at that time.”

With a view to easing pressure on the two State Banks, the CPC settled the entire amount owed to them, Minister Wijesekera said. The improvement of the financial situation due to the revision of fuel pricing formula enabled the CPC to repay Rs 150 bn out of Rs 199 bn. “We have settled the total amount owed to the People’s Bank and the Bank of Ceylon debt was brought down to approximately Rs 50 bn.”

Minister Wijesekera said that the CPC faced a major crisis as supplies had been disrupted due to their failure to pay suppliers. Of USD 730 mn debt, the CPC owed China about USD 400 mn, Minister Wijesekera said, disclosing China had initiated legal action against Sri Lanka in this regard. On a priority basis the CPC had settled the entire USD 730 mn owed to suppliers.

Commenting on the Indian credit-line used by the CPC to the tune of USD 700 mn, Minister Wijesekera said that the Treasury had undertaken to settle that amount. The minister contradicted Ananda Palitha’s claim that the Treasury had taken over the entire CPC debt amounting to USD 3 bn. According to him, consumers were charged Rs 50 to Rs 55 as excise duty per a litre of petrol and diesel to cover USD 700 mn Indian loan.

Referring to the long overdue payment for Iranian crude, Minister Wijesekera said it was being repaid in monthly installments of USD 5 mn each.

Responding to another query, Minister Wijesekera said that the CPC had been in debt to the tune of Rs 2 trillion. The Treasury had taken the bigger share of that amount including the USD 700 mn Indian credit line, he said. Asked whether Sinopec and Lanka IOC benefited from the Rs 50 to Rs 55 excise duty, Minister Wijesekera declared that money ended up with the Treasury.

Minister Wijesekera said that although diesel was subjected to tax it was not used to generate electricity now. Furnace oil and naphtha weren’t subject to taxes, he said, adding that the CPC didn’t make profits by supplying furnace oil to the CEB.

Asked why Sri Lanka didn’t obtain fuel supplies from Russia but almost entirely depend on Singapore based trading firms, Minister Wijesekera said that there were about 10 suppliers and the CPC followed tender procedures.

Minister Wijesekesa said that after Sri Lanka had finalized agreement with the IMF in respect of the USD 2.9 bn loan package, the CPC didn’t accept unsolicited bids.