6.5 C
Thursday, December 7, 2023

CEYPETCO plunged into huge losses

Sandun A. Jayasekera
The Ceylon Petroleum Corporation (CEYPETCO) has run into a staggering loss amounting to Rs. 27.21 billion in the first half of this year alone against a loss of Rs. 26.9 billion for the entire 2010, according to a the COPE exposure, a Parliamentary source said yesterday.This comes amidst CEYPETCO’s struggle to recover a colossal sum of Rs. 67 billion from seven government and semi-government institutions and a private power supplier. In addition another Rs. 17 billion is due from the three armed forces and the police. The Parliamentary source said the Committee On Public Enterprises chaired by Senior Minister D.E.W.Gunasekara scrutinized the CEYPETCO audit reports last week and found that the outstanding debts to the CEYPETCO from state and semi government  institutions ran to a colossal Rs. 85 billion.

The main defaulters to the CEYPETCO as at July, 11, 2011 were CEB – Rs. 55.37 billion, Sri Lankan Airlines – Rs. 4.8 billion, CGR – Rs. 3.3 billion, West Coast Power  Co. – Rs. 2.45 billion, Mihin Lanka – Rs. 690 million, RDA – Rs. 477 million, Maganeguma programme – Rs. 214 million and SLTB –  RS. 90 million.

The debts receivable to CEYPETCO by last month from the Sri Lanka Navy was Rs. 10.36 billion, Sri Lanka Army was Rs. 5.40 billion, Sri Lanka Air Force was Rs. 1.37 billion and from the Sri Lanka Police – Rs. 32 million.   

A General Treasury analysis on the performance of the CEYPETCO from 2008 to 2010 to the COPE highlights a series of lapses on the part of the CEYPETCO top management that has brought the downfall of one of the main semi-government institutions that provides a vital service to the nation.

It was also revealed during the COPE inquiry that a majority of top management lacked knowledge in the petroleum trade and related matters, the source told the Daily Mirror.

“The lack of a clear strategy to operate in the market, low productive use of employees, weak financial and operational management and non-optimal utilization of resources have contributed significantly to the deterioration of the performance of the CEYPETCO negating the effect of government assistance.

This is evident as there is only marginal difference between the cost of fuel  produced at the CEYPETCO refinery at Sapugaskanda and the cost of refined products imported,” the Treasury report charged.

The Ceylon Petroleum Storage Terminal Ltd (CPSTL) which provides storage and terminal facilities to CEYPETCO  was not properly managed. The CPSTL passes on its inefficiencies to the CPC through a throughput charge which intern affects the CEYPETCO margins.

The Treasury analysis report recommends developing strategies to achieve the set objectives of the Corporate Plan 2010-2014 and implementation of activities set down in the Action Plan 2011 to bring this difficult situation into affordable condition.It also recommends the establishment of a Treasury Management Unit and to recruit and appoint of a CEO and CFO immediately for the CEYPETCO and the strengthening of regulation aspects in the sector for the benefit of the consumer and CEYPETCO to ensure the viability of the sector.


Latest news

Related news