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News  


 

CEB undertakes to pay its debts

By Santhush Fernando
The Ceylon Electricity Board (CEB) is to pay Ceylon Petroleum Corporation (CPC) Rs.3.4 billion out of the Rs.60 billion debt it owes to the CPC, following an understanding between the two parties.
Last year October, Treasury intervened into a dispute in a bid to facilitate the reimbursement of billions of rupees owed to CPC by government entities – the majority of which is incurred by CEB – as per government’s commitment to International Monetary Fund (IMF).

Petroleum Resources Ministry Secretary Titus Jayawardene confirmed to The Nation that at a meeting held on May 17, 2010, CEB had undertaken to settle the outstanding, starting within two weeks or by May 31, 2010.
However, a CPC official said that there was a dispute with regard to the amount agreed.
“During 2009, CEB’s debt owed to CPC surged to Rs.46bn on principal alone and a further Rs.14bn on interest. Although even Treasury minutes state that they have agreed to pay back Rs.8bn, the CEB is of the view that it undertook to repay only Rs.3.4bn, which is the balance after deducting the last payment out of the initially agreed Rs.8bn,” he said.

“Furthermore, how can the CEB say it owes only Rs.46bn to the CPC? What about the Rs.14bn interest incurred by the CPC?”
According to the official, at its recent review meeting with IMF, the CPC had scoffed at the figures and accuracy of country’s banking watchdog Central Bank of Sri Lanka (CBSL).
“The CPC proved to IMF officials that we made an operating profit of Rs.11bn in 2009. The CBSL had misrepresented in its Annual Report that CPC made a Rs.12bn loss for 2009. That is partly incorrect,” he added.

“Treasury promised and owes us a Rs.12.6bn subsidy for furnace oil, which we provide to the CEB and Independent Power Producers (IPPs) at Rs.26 a litre, half the cost of Rs.52, with the CPC bearing the balance. Furthermore, CEB’s Sapugaskanda residual oil plant owes us Rs.6bn for supplies last year,” he continued.
“Because Treasury has taken over our power to revise prices, we have not revised prices for the last one year and half, and even to our retail customers we are selling fuel oil at Rs.26, incurring a Rs.2.8bn loss for 2009 alone. Furthermore, with the kerosene subsidy not been reimbursed, we have to bear Rs.1.6bn in losses. So, altogether, we have lent to government a staggering Rs.23bn against CBSL’s figure of Rs.12bn, which means that we made an operating profit of Rs.11bn,” the official pointed out.

Former Power and Energy Ministry Secretary M.M.C. Ferdinando, in a strongly worded letter sent last year warned CEB Chairman E.A.S.K. Edirisinghe that he would invoke Constitutional powers vested in him as the Secretary and order CEB’s bankers, to settle overdues utilising its monthly revenue.
Ferdinando chided Edirisinghe for failing to “honour commitments (of CEB), and (continuing) to allow current dues to accumulate, thereby pushing the CPC into a huge liquidity crisis.”

He added that as the Ministry Secretary he would request the Treasury to direct the Bank “to settle all the dues to the CPC for supplying fuel to the CEB… through the monthly revenue of the CEB without allowing the CEB to withdraw such money for expenses other than the payment of salaries and wages.’’
Recently, the newly appointed Petroleum Resources and Petroleum Resources Development Minister Susil Premajayanth too warned the CEB, that the CPC will halt all oil imports undertaken on behalf of the former.