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ECONOMYNEXT – Sri Lanka’s Power and Energy minister revealed ‘multiple’ reasons for the state-owned Ceylon Petroleum Corporation to continue to operate under losses for years.

Power and Energy Minister Kanchana Wijesekara in a Twitter message on August 5 said that there are multiple reasons for the CPC to operate under losses, with selling at subsidized rates, rupee depreciation, dues from government-owned institutes and overpaid, inefficient and bloated staffing being prominent reasons.

In April 2022 before the new price formula took place, former Chairman of CPC Sumith Wijesinghe said that the CPC lost between 800 to 1000 billion rupees a day due to increased global prices and un-revised prices in the country.

Rapid rupee depreciation in the country, with the Central Bank deciding to float the rupee when it was at 203 against the US dollar further escalated the loss for the CPC.

Minister Wijesekara said due to rupee depreciation, the payback price rate increased to 367-390 rupees against the USD for the purchases made at 203 rupees.

CPC provides fuel for transport services in the country including, the Transportation Board, Railway Department, and Sri Lankan Airlines while also providing fuel for the Ceylon Electricity Board for thermal power generation.

Dues from SriLankan airlines which values up to 300 million US dollars and 60 billion rupees from CEB is also contributing factor to the losses of CPC.

Wijesekara said high premiums, demurrages and interest charged by banks in the face of the ongoing economic crisis have also contributed to the losses of the firm.

With purchasing of crude oil being stopped, the Sapugaskanda refinery closed down on several occasions during 2021 and early 2022.

Even though the refinery is back in operation, it is not operating at the fullest capacity and Wijesekara said, and increased dependence on high-cost end products in the global market also contributed to the losses made by CPC.

Wijesekara pointed out a 25% salary increment on a collective agreement since 2012 for the bloated and inefficient CPC staff was another factor for the company’s losses.

With price revisions taking place in the recent past, service fares have increased rapidly in all sectors. Private sector petroleum transporters withdrew from fuel distribution several times asking to increase the prices, and Wijesekara said overall distribution cost has increased significantly for the CPC.

(Colombo/ Aug 5/2022)

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