Informal discussions have been held between the government and the local banks which entered into oil hedging agreements with the Ceylon Petroleum Corporation (CPC) regarding the contracts.
Secretary General of the Bankers’ Association Upali De Silva told The Sunday Times FT that the government and the local banks are trying to come up with an arrangement following a directive from the Central Bank (CB) in January 2009 ordering the banks not to proceed with or give effect to the transactions.
Mr. De Silva added that banks have already put positions in their accounts this year for the money received from hedging. Meanwhile, arbitration proceedings on hedging agreements between the government and Citibank and Deutsche Bank will most likely begin next year, according to Attorney General Mohan Peiris. Speaking to The Sunday Times FT, he said the government is in the process of filing its responses. He added that the third international bank, Standard Chartered Bank, has not opted for arbitration.
Mr. Peiris said arbitration proceedings with Citibank will be held in London while the venue for Deutsche Bank is yet to be decided.
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