CPC to be made a self financing entity
View(s):Sri Lanka’s huge loss-making Ceylon Petroleum Corporation (CPC) is making another attempt to structure its business model by divesting stakes in distribution and imports. Previous attempts of a similar kind to make the CPC a self-financing entity have been blocked by unions, workers and political parties fearing it would increase prices.
Officials said the government is considering a budget proposal to restructure the CPC by divesting half its stake (33 per cent) to the private sector to streamline the importation, distribution and sale of petroleum. At the moment, the CPC has a 66.5 per cent stake while the balance 33.5 per cent is held by the Treasury.
This proposal was forwarded recently to the Secretary to the Ministry of Petroleum Resources Development by the Treasury Secretary Dr. R.H.S Samaratunga seeking observations of the ministry. Minister of Petroleum Resources Development Chandima Weerakkody told the Business Times that a proposal to hand over the management of fuel importation, distribution and sales to the private sector has been put forward to the Treasury by a business chamber.
This proposal was discussed with officials and trade unions of the CPC and a final decision has not been reached as yet, he added.
The proposed public and private sector partnership will help eliminate irregularities, waste, corruption and staff overheads at the CPC which have become an obstacle during the previous regime, a Treasury official who wished to remain anonymous told the Business Times.
The CPC debt to the Bank of Ceylon and the People’s Bank has increased to Rs.400 billion and it pays an interest of Rs.1.2 billion, he said adding that it is also paying taxes amounting to Rs. 65 billion per annum. The Corporation imports refined petroleum on 6-month credit basis at present, he disclosed.
He also revealed the marginal profit recorded in first two months of 2015 reversed to a loss of Rs. 5 billion by the end of April 2015. During the same January to April 2014, CPC recorded a profit of Rs. 2 billion. General Secretary of the CPC National Workers Union, Ananda Palitha told the Business Times that the downfall of the CPC began 10 years ago and no government has taken action to remedy the situation.
The previous Mahinda Rajapaksa regime brought down the administration to a very low level appointing cronies to top posts, granting illegal promotion of stooges and encouraging them to carry out financial misappropriation and corruption.
At least 7000 employees have been recruited to the corporation in the past 10 years over and above the required staff, he said adding that no action has been taken to modernize Sapugaskanda oil refinery by all previous managements.
Moreover, if the refinery is put back into operation by modernizing it, the selling prices of main petroleum products namely petrol, diesel and kerosene could have been significantly reduced to pass through the benefit of the price reduction of the international market to the consumers.
He pointed out that the production of lubricants, agro chemicals, and bitumen as well as the ship bunkering of the CPC had been neglected and it has incurred a massive revenue loss to corporation.
Mr. Palitha said that these money spinning areas should be re-developed to pull out the CPC from the current abyss.
The government should tackle all these short comings strengthening and streamlining the management by appointing suitable and qualified persons to top posts, he said adding that privatization of the corporation is not the only solution to the present crises at the CPC.