CPC awards long term fuel supply tenders amidst dollar crisis
The Ceylon Petroleum Corporation (CPC) has entered into several long term contracts with international suppliers to maintain a steady fuel supply amidst a depletion of stocks.
It is also ready for spot purchases buying dollars from the market amidst the present foreign exchange constraints and losses of the CPC, a high ranking official of the CPC said.
The CPC has awarded a long term contract to M/s Conscio Ltd, Nigeria to import Murban Crude Oil for nine months from June 1, 2021 to February 28, 2022. Oasis Enterprises (Pvt) Ltd. of Singapore has been awarded another long term contract to supply 92 octane petrol while Petrochina Company in Singapore has been given a contract to supply 92 octane petrol, super diesel and diesel for a period of eight months from 1 June 2021 to 31 January 2022, the official said.
The aim of the agreements with oil-producing nations would be to import crude oil at concessionary rates using a special quota system under a long-term payment scheme.
The official disclosed that Sri Lanka is still paying for the oil imports for the first quarter of 2020, adding that the CPC has sufficient petrol and diesel after clearing 35,000 metric tons of diesel from the latest shipment which arrived at the port on July 18.
However the main issue at present was the dwindling of foreign reserves in two state banks and its inability to allocate US$ for LCs opened on behalf of CPC, he said adding that the CPC owed $3.3 billion to these banks.
The state – run entity is attempting to obtain a long-term refinance facility of $1 billion from foreign exchange markets while continuing to grapple with financial shortfalls, depletion of rupee and mounting debt accumulated since 2008 following the oil hedging scam.
According to the financial statements of the year 2019/2020 under review presented to the audit, the value of trade debtors including the CEB and SriLankan Airlines totaled Rs. 153.22 billion.
This was an increase of 76.82 per cent as compared with the value of trade debtors for the preceding year amounting to Rs. 86.65 billion.
The ultimate result was the negative net worth of the CPC that amounted to Rs. 293.21 billion by the end of the year 2019/2020 under review, Auditor General’s recent report indicated.
Normally when purchasing fuel, 300,000 barrels of fuel are imported in bulk stock while shipping charges are evenly distributed over the 300,000 barrels.
Industry sources said that at times the CPC also resorts to short term procurement. In such instances, since the short term tender is limited to just 170,000 barrels, it could lead to higher fuel prices as the shipping charges are distributed among a lesser number of barrels.
In the case of long-term tenders, it takes two weeks to submit a bid and one month to import the oil stocks.
However, the short-term tender has been given five days to bid and 15 days to import 92 octane petrol.