The order in the arbitration case pertaining to Sri Lanka’s controversial oil hedging deal has been reserved by the Singapore Arbitration panel with the judgment expected within three months, Petroleum Minister Susil Premajayantha told the Business Times.
Arbitration proceedings of the CPC- Citi Bank oil hedging case ended in Singapore on November 13. The Government will appeal against the expected judgment if it is unfavourable for the country, he said.
However he noted that, “If there were any compensation to be paid, it would have to be borne by the Ceylon Petroleum Corporation (CPC)” and those who were behind the hedging deal including former CPC Chairman Asantha De Mel.
The Minister blamed the officials involved in the deal for entering into the controversial deal without a proper knowledge on hedging.
He noted that among the legal issues in the case is whether the hedging agreement was duly authorized and, in particular, whether it fell within the scope of direction by the Cabinet of Ministers in January 2007.
These matters were brought to the notice of the panel by Attorney General Mohan Peiris when he defended the country’s position strongly before the arbitration panel, he said.
Under these circumstances, the Petroleum Ministry has decided to appoint a Treasurer to handle fuel transactions soon as there is an urgent need for a competent and knowledgeable person to strike forward transaction deals of the CPC and to study the world oil price fluctuations, as well as derivatives market and other areas associated with fuel purchasing.
The CPC began concluding oil hedging agreements in February 2007. Between February 2007 and September 2008, the CPC concluded hedging agreements with three international banks: Citibank, Standard Chartered and Deutsche Bank as well as two local banks (People’s Bank and Commercial Bank).