The Government’s talks with commercial banks over the US$ 800 million (Rs. 92 billion) oil-hedging dispute have collapsed and the issue will be decided by international arbitration, Minister Sarath Amunugama said yesterday.
According to Mr. Amunugama, who is the Minister of Public Administration and Deputy Finance Minister, the controversial deals which the Attorney General ruled were flawed will now have to be settled in an international arbitration tribunal after commercial banks refused to compromise on payments due to them.
 |
| Amunugama |
Mr. Amunugama said the ministerial committee which was appointed to resolve the payments crisis held several rounds of talks with the banks but the talks had failed and now the government would contest the issue internationally.
Citibank and Deutsche Bank have already filed for international arbitration on payments due from the Ceylon Petroleum Corporation (CPC).
The CPC owes these banks and Standard Chartered Bank, Commercial Bank and People’s Bank more than $800 million over hedging agreements on oil purchases.
Amidst a public outcry over these deals, petitions were filed in the Supreme Court against the payments. However, the case got dragged into an issue over the price of petrol in the domestic market and the whole case was terminated after the government refused to reduce oil prices as ordered by the court.
“We tried to sort this out and renegotiate the agreements but the banks were only willing to re-schedule the payments and offer a loan for this purpose. We could not agree to this as there was clear indication from many sources including the Attorney General that the agreements were flawed,” said Dr Amunugama, who was a member of the ministerial committee.. The other members were Ministers G.L. Peiris, A.H.M. Fowzie and Nimal Siripala de Silva.
Opposition critics and economists said hedging deals were one-sided and heavily in favour of the banks.
In the meantime, Dr Amunugama will lead a Sri Lankan delegation tomorrow for the special sessions of the IMF and the World Bank in Washington. These meetings are seen as crucial this time in the aftermath of the biggest global recession since the 1930s.
Central Bank Governor Ajith Nivard Cabraal and Deputy Governor Ranee Jayamaha are also in the delegation. Sri Lanka has requested a $1.9 billion standby loan from the IMF as balance of payments support. |
E-mail