• Subject minister says losses expanded to Rs.57bn by May 
• Higher global oil prices and exchange losses on foreign borrowings key reasons 
• CPC exploring possibility to obtain long-term loan of US$ 1.0bn from foreign market-FinMin
• CPC’s accumulated losses as at end-April 2021 at Rs.382bn

The Ceylon Petroleum Corporation (CPC) reported a net loss of Rs.45 billion during the first four months through April 2021, and the subject Minister had said the losses mounted to Rs.57 billion by May as oil prices in the global markets climbed, while CPC incurred foreign exchange losses on the foreign borrowings it had made. 

As losses and debt accumulate to unsustainable levels, the CPC in June raised retail prices of fuel when people were locked out of their jobs and livelihoods, drawing a vehement public outcry.

The increase in prices made the Fuel Price Stabilisation Fund brought in March 2020 a complete farce as it failed to deliver its namesake task.  

While the Finance Ministry data available through April showed a Rs.45 billion loss, Energy Minister Udaya Gammanpila was quoted to have said in Parliament last week that the five-month losses through May had further risen to Rs.57 billion.

The losses were also partly caused by foreign exchange losses made on the foreign exchange loans taken without hedging for foreign exchange risk. 

CPC is now planning to re-finance US$ 1.0 billion from foreign sources, the Finance Ministry said as there were reports that the State refiner and the distributor of petroleum products has US$ 2.081 billion loans owed to State run Bank of Ceylon and People’s Bank. 

“Further, in a bid to strengthen the financial position, CPC is in the process of exploring the possibility of obtaining a long-term re-financial facility of US$ 1.0 billion from the foreign market,” the Finance Ministry said. 

By the end of April 2021, CPC had accumulated losses to the tune of Rs.382 billion, while the outstanding borrowings from the two State lenders rose to Rs.670 billion from Rs.529 billion as at 2020 end. Treasury guarantees these loans to the CPC. 

As of April 2021, the Treasury has guaranteed Rs.181.4 billion worth loans to CPC from People’s Bank and Rs.179.9 billion worth loans from Bank of Ceylon. 

During the first four months, CPC’s total import cost of petroleum products increased by 28 percent to US$ 894 million from US$ 699 million in the same period in 2020 as the overall demand for petroleum products increased by 7 percent as the economy returned to normalcy. 

By April end, receivables from various institutions including Ceylon Electricity Board and SriLankan Airlines stood at Rs.149.6 billion. 

Meanwhile, CPC is also carrying out a feasibility study to recommence the bunkering business with a new business model and to build new 100,000 bbl refinery capacity as a public-private partnership.