Overpriced oil cargoes: Fujairah takes CPC to court, here and abroadView(s):
The Ceylon Petroleum Corporation (CPC) is once again being sued internationally, after the much tainted hedging cases, following its failure to settle a pricing dispute with Fujairah Petroleum Co.
Manisha Heerasing, head of a two-member negotiating team from MOCOH, an oil distribution, logistics and trading company based in Switzerland, which represented Fujairah during talks with CPC officials in Colombo last week, told the Sunday Times that Fujairah had filed a case in the Commercial High Court in Colombo and initiated arbitration proceedings in Singapore.
Responding via e-mail, she said that pleadings would be filed shortly and more details would be revealed later.
The dispute is over over-pricing. The CPC had originally agreed to a price of Singapore Platts + US$ 54 a ton for six low sulphur fuel oil (LSFO) cargoes of 35,000-40,000 tons each. The supplier was Fujairah. However, the price was changed — adding a further $54 a ton (a total of Platts + $108) and cabinet approval was sought and obtained.
After one shipment was made and just as a second shipment was being unloaded, some officials at CPC discovered that the original agreement of Platts + $54 per ton was doubled to $108 per ton surreptitiously and brought it to the notice of higher authorities, trade sources said.
Subsequently the CPC asked for a refund of the additional $54 per ton from Fujairah but the foreign company refused and sent Ms. Heerasing’s team to negotiate a settlement.
Ms Heerasing agreed to bring down the price to $89 per ton but the CPC was not in favour and the negotiations ended inconclusively.
The CPC has already paid Fujairah an additional US$ 2 million at the rate of $108 a ton and is demanding this refund but if Fujairah succeeds in the court cases, the CPC stands to lose a total of $12 million.
The sources said Fujairah is one of the blue-eyed companies of the Petroleum Industries Ministry and the CPC but is said to be a front for another dealer M/s Vitol, a company that was once blacklisted by the CPC and reinstated by former Chairman Harry Jayawardena.
CPC Managing Director L.E. Susantha Silva was not available for comment as he is away from the island.