Kanchana announces CPC is ‘debt-free’

Wednesday, 5 July 2023 00:50 –      – 105

 


 

  • Says sizable chunk of project loans, loans obtained by CPC already cleared by Treasury
  • Intends to settle two outstanding loans via newly introduced Rs. 50 tax scheme 
  • Insists on restructuring process, despite financial stability at CPC to streamline operations, boost efficiency 
Power and Energy Minister Kanchana Wijesekera

By Charumini de Silva

Power and Energy Minister Kanchana yesterday declared that the State-run Ceylon Petroleum Corporation (CPC) is now in a stable financial position following series of measures implemented during the past one year.

The Minister admitted that settling the $ 750 million in supplier arrears was the most daunting task, but all unpaid invoices were paid by April 2023, confirming the CPC is currently ‘debt-free’.

“A sizable chunk of the project loans and loans obtained by the CPC has already been cleared by the Treasury. It also includes the Rs. 200 billion owed to the People’s Bank and the Bank of Ceylon via a balance sheet restructure,” he said at the Presidential Media Centre under the theme of ‘Collective path to a stable country’.

At present, only $ 750 million for the Indian Credit Line obtained last year for fuel purchase and $ 300 million to Iran for oil purchased in the early 2000s remained outstanding. Payment to Iran remained unsettled for the past years due to international trade sanctions imposed.

Minister Wijesekera said that these two outstanding loans will be paid via the newly introduced Rs. 50 tax scheme, which replaces the previous 1% royalty fee on turnover. Currently, each petroleum supplier operating in the country must pay Rs. 50 for every litre sold, which is technically being borne by the motorist.

The Minister expressed optimism in implementing this tax scheme over the next 12 months to recover the entire amount outstanding, noting that the tax can be eased thereafter.

“Now that the money is collected via the Rs. 50 tax system, we have agreed to pay $ 5 million each month to offset the $ 300 million to Iran. It is not paid directly to the Iranian Government. The Plantation Ministry will get payment from the CPC to offset with tea vendors who provide tea for Iran,” he explained.

With Iran, Sri Lanka has previously agreed to settle the outstanding oil via a trade-off of tea.

Despite the financial stability, the Minister insisted on the restructuring process of the CPC, noting it was essential to streamline operations and optimise efficiency within the Corporation.

He reassured that the focus was on maintaining an appropriate number of employees and officials to ensure uninterrupted services.

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