By Bandula Sirimanna
Some officials of the Ceylon Petroleum Corporation (CPC), allegedly involved in the oil hedging deals, are attempting to conceal evidence with regard to the issue, senior CPC trade union members charged.
The new CPC Chairman Major General Asoka Thoradeniya was not available for comment. When this newspaper tried to contact the CPC chairman over the phone on Thursday, one of his aides, Capt. S. Weerasinghe said that the chairman was busy and could not be reached.
Concern over the files grew as a special report on the issue by a team of industry experts concluded that Petroleum and Petroleum Resources Development Minister A.H.M. Fowzie must take responsibility for the oil hedging debacle.
The unofficial report by a group comprising a professional manager, a petroleum specialist, a banker, a financial analyst and an oil trader said the CPC could be exposed to financial losses on account of hedging transactions ranging from US$700 million to over US$1 billion if oil prices were to remain at current levels or trends were to continue and the eight hedging contracts were to prevail. The report was compiled and edited by Daham Wimalasena, a former CPC Chairman. (Please see Page 6 for more details).
These revelations came as more petitions poured in on a CPC deal that has shocked the nation, details of which came into the public domain through a series of reports in The Sunday Times. The oil hedging cases come up before the Supreme Court tomorrow.
Public interest activists Vasudeva Nanayakkara and Nihal Sri Ameresekere on Wednesday filed petitions in the Supreme Court to intervene in the hedging cases where, among other matters, they are blaming foreign banks for selling a one-sided deal to the CPC.
In another incident, trade union officials said, Minister of Petroleum and Petroleum Resources A.H.M.Fowzie and his security staff entered the office of the CPC Chairman on December 3 and took away several files a day before the Minister departed to Mecca on a Haj pilgrimage. He is due to return tomorrow. Union officials are urging the authorities to protect these documents from officials involved in the deal. In a separate move, legal action is being contemplated on officials like CPC DGM (Finance) Lalith Karunaratne or including them as respondents in the ongoing petitions.
The summary of the report by the committee of experts says the zero collar hedging instrument used by the CPC provides protection to the CPC against escalating oil prices was limited to three months if prices were to move against positions taken by banks with a maximum of US$2.5 million to US$7.5 million depending on the size of the contract. It said the authority granted to the CPC was interpreted by the Minister and the CPC Chairman as a carte-blanche clearance to circumvent established procurement and tender board procedures established by the CPC in terms of cabinet approved financial regulations and the Chairman arrogated powers of the CPC unto himself.
“The CPC Chairman dispensed with cabinet approved procedures for procurement of crude oil and products and became the single authority for procurement of hedging instruments which covered about 40% of the country's requirements of crude oils and products. No one other than the Minister and CPC Chairman should bear responsibility for the hedging debacles. The Minister exercised little supervision of the Chairman. Not even the Secretary to the Petroleum Ministry, who is a member of the CATB (Cabinet Appointed Tender Board), was kept informed on the content and substance of hedging contracts. The permanently-sitting CATB and the TEC (Technical Evaluation Committee) were bypassed,” it said. |
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