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CPC wants autonomy to decide commercial operations
View(s):By Damith Wickremasekara
The Ceylon Petroleum Corporation (CPC) and the Finance Ministry are on a collision course over raising funds from the CPC, after turning down a Treasury request to transfer Rs. 10 billion to the Consolidated Fund.
The CPC, this week, through the Ministry of Petroleum Resources Development has responded to the Finance Ministry Secretary explaining its current ‘weak financial position’ and made recommendations to overcome them.
The CPC was responding to a discussion chaired last month by Finance Minister Ravi Karunanayake and attended by Petroleum Resources Development Minister Chandima Weerakkody.
The CPC in addition to its recommendations to improve the financial position has highlighted reasons for the inadequacy of capital in the corporation.
Among the recommendations are that a decision taken to provide the balance of Rs. 75 billion proposed by the budget for the year 2016 should be implemented.
The Corporation also has requested the Ministry to instruct SriLankan Airlines and Mihin Lanka to settle overdue amounts immediately in order to improve the CPC’s cash flow. The outstanding amount from the two institutions is around Rs. 8.9 billion.
Among the reasons given for the CPC’s financial position is the increase of Customs duty on petrol by Rs. 20 per litre during the year 2015 and the increase of Customs duty and excise duty on Diesel by Rs. 6 and Rs. 10 per litre, respectively, with effect from June and August this year.
The reduction of retail prices of petroleum products last year has also been attributed as a reason for the weak financial position of the CPC.
In its recommendations the CPC has suggested that the Government should make a policy decision to allow a cost reflective pricing strategy be implemented and allow the CPC to be autonomous in deciding on commercial operations.
Finance Minister Ravi Karunanayake said that the Rs. 10 billion sought by the Treasury to be transferred the Consolidated Fund was only part of the profits of the CPC.
He said that the CPC had an overdue of Rs. 300 billion to transfer to the Treasury and was bound to transfer the funds.
Government revenue or tax proposals cannot be decided by the CPC, he said.
Earlier the Ministry of Petroleum proposed the introduction of a pricing formula for fuel prices in view of the reduction of international oil prices, but the proposal was turned down by the Finance Ministry. Earlier the Treasury sought the Plantation Minister Naveen Dissanayake threatened to resign if the Finance Ministry tries to take a sum of US 60 million dollars belonging to the Sri Lanka Tea Board, which falls under his Ministry.