CPC in last ditch effort to turn viable
In a last ditch attempt to transform the debt-ridden Ceylon Petroleum Corporation (CPC) to a viable venture, the present management of the state-owned entity is set to implement several strategic projects worth billions of rupees, top officials of the CPC said.
This move comes in the wake of the agreement reached between the government and the International Monetary Fund (IMF) to make loss-making state enterprises including CPC more efficient while introducing far reaching management reforms.
In line with IMF conditions for its Extended Fund Facility of US$1.5 billion, the government is compelled to introduce reforms to make loss-making CPC more efficient and cost effective soon.
Under these circumstances, the CPC has made public a strategic plan to expand and modernise several of its existing fuel refining and distributing facilities to meet the country’s growing demand for fuel both efficiently and cost effectively.
Addressing a fully packed media conference in Colombo this week, CPC Chairman Dammika Ranatunga said that he has avoided media since his assumption to high post at the corporation as it was not the right time for him to talk about the CPC.
But the time is now opportune to reveal the series of changes that have been undertaken by the CPC to make financial gains despite its huge debt burden of Rs. 300 billion to the two state banks, he said adding that on the other hand, CEB owes Rs. 40 billion and Sri Lankan Airlines Rs. 11 billion to the CPC.
He added that he has made a request from the Treasury to grant tax concessions or a concessionary loan to implement the strategic plan of the CPC especially for key expansion projects including the $2.3 billion Sapugaskanda oil refinery.
The foregone revenue due to price concessions the CPC has to offer currently stands at Rs. 68 billion for the first nine months of 2017, he said adding that the corporation cannot issue red notices to CEB or SriLankan Airlines to pay their dues immediately.
Answering a question raised by a Business Times journalist, he noted that fresh tenders have been called for a strategic project of the CPC: installing a state –of- the- art fuel hydrant system at Bandaranaike International Airport(BIA).
Elaborating on this matter further, M.A.D. Mallikarachchi, acting Deputy General Manager of CPC noted that a Singaporean company has been selected for this by the Ministry of Petroleum Resources Development. But the matter is again before the Procurement Appeal Board and the CPC is awaiting its verdict, he said.
The previous tender has been cancelled by Minister Arjuna Ranatunge following revelations of tender irregularities highlighted by Business Times and CPC trade unions since March this year. The same tender had been called twice- on June 18, 2015 and on April 29, 2016.
CPC DGM Marketing Krishantha Wickramasinghe noted that the renovation or the replacement of certain existing machinery and equipment is necessary after 60 years of operation.
He expressed the belief that the CPC could make profits with the implementation of the strategic plan meeting the current fuel requirement of 7.8 million litres per day with an anticipated growth of 5 per cent per annum.
The strategic plan includes the expansion of the refinery at Sapugaskanda, installation of a continuous catalyst regeneration (CCR) unit, a new automated terminal and boiler in Sapugaskanda, the laying of BIA aviation fuel transfer pipeline, building terminal storage tank in Muthurajawela for aviation fuel, a state-of-the-art fuel hydrant system at BIA, an interconnecting pipeline between Muthurajawela and Kolonnawa terminals, a cross-country pipeline,and relocating of fuel depots in proximity to economic zones.
The other components of the plan are the re-evaluation of procurement criteria, developing enhanced products and services along with plans to restructure the CPC debt portfolio by procuring different sources of funding.