CPC records thumping Rs.628bn loss for January-April period

• Losses exacerbated by massive foreign currency translation losses following rupee deprecation 
• Accumulated losses top Rs.1tn; negative net worth at Rs.985.9bn
• Receivables from CEB and SriLankan Airlines stood at Rs.175.9bn by the end of April

Ceylon Petroleum Corporation (CPC) sunk further into losses in the first four months in 2022 as the overall losses reached a massive Rs.628.4 billion, which was enlarged by a thumping foreign currency translation loss as the State-run utility carries massive foreign currency loans. 

The losses at the operating level derived after stripping off the foreign exchange losses came in at Rs.64.9 billion compared to Rs.15.7 billion in the corresponding period in 2021. 

While the operating losses widened mainly due to the surge in global oil prices as the retail prices remained sticky until recently, the overall losses were caused by the float of the rupee which prompted the CPC to revalue its foreign currency liabilities at a massively devalued exchange rate.  

According to the data disclosed by the Finance Ministry of some selected State-owned enterprises in the first four months ended in April 30, 2022, CPC came on top as one of the leading loss makers, which was exacerbated by foreign currency losses. 

The foreign exchange loss in the four months was an unprecedented Rs.549.9 billion as opposed to the Rs.26.7 billion loss in the same period in 2021 as its books were full of foreign currency loans due to State-owned lenders. 
For instance the financial data showed that CPC’s total liabilities due to the two State banks by the end of April 2022 stood at Rs.1.22 trillion. 

“CPC’s financial position would continue to be at risk due to foreign currency denominated liabilities on its balance sheet. A depreciation of the rupee results in added foreign exchange losses for CPC which weakens its bottom line,” the Financial Ministry said in its mid-year fiscal report.

The financial performance is a clear reflection of the rupee liquidity shortages faced by the energy utility on top of the acute dollar shortage it has been facing since early this year which forced people to wait in miles-long queues for days holding back economic activities. 

The Central Bank a few days ago disclosed that CPC had requested Rs.217 billion from the Treasury to make up for the gap in rupee cash flows to buy dollars reflecting that even after its cost reflective pricing formula, the energy utility is not making enough rupees due to massive receivables from other loss making State entities such as CEB and SriLankan Airlines.  

Due to the surge in global oil prices exacerbated by Russia’s invasion of Ukraine, CPC had to incur 40 percent more for oil imports in the first four months, which came in at US$ 1,254 million, than what it spent in the same period last year, which was Rs.894 million. 

While sanctions on Russia could push prices beyond US$ 350 a barrel, the global recession concerns have tipped price per barrel briefly below US$ 100 during the last few days before settling at US$ 101.13 on Friday.

A barrel of crude at the Brent futures exchange, the global benchmark for oil, was trading at US$ 69 a barrel a year ago. 

With four months’ losses, the accumulated losses at CPC rose to Rs.1.05 trillion while the negative net worth or in other words its external liabilities over its total assets were at Rs.985.9 billion.  

Meanwhile, the receivables from various other enterprises, leading of which are the Ceylon Electricity Board and SriLankan Airlines stood at Rs.175.9 billion by the end of April.