Citi Bank was this week ordered by a Singapore arbitration panel to pay US$2.5 million (Rs.290 million) as legal fees to the Ceylon Petroleum Cooperation (CPC) in the oil hedging deal dispute.
The Ministry of Petroleum Resources and Development received this directive in writing from the arbitration panel on Tuesday, said Minister Susil Premajayantha.
He said that the arbitration panel in August 2011 voided an oil hedging deal between Ceylon Petroleum Corporation and Citibank, rejecting the bank’s demand for $192 million and interest payments. He told the Business Times that thereafter the CPC made claims for legal costs forwarding bills and other relevant documents to the panel, resulting in this week’s decision.
The Citi bank sought arbitration to recover dues under complex options positions sold to Ceylon Petroleum Corporation, after it refused to pay up when oil prices collapsed in 2008.
In another oil hedging case, the London Commercial High Court ruled that the CPC should pay nearly $162 million plus interest to Standard Chartered Bank for non-payment of hedging dues. The CPC has appealed against the ruling, Minister Premajayantha, addng that the government is confident in winning the appeal.
He disclosed that the Deutsche Bank oil hedging case was concluded and the order is pending.