Petroleum SOE in talks to avoid bankrolling Sri Lanka state airline losses
Jul 02, 2018 19:43 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation Corporation which has been bankrolling losses of SriLankan Airlines is in talks to avoid closing the fuel taps, Petroleum Minister Arjuna Ranatunga has said.
Media reports said the CPC had given more than 15 billion rupees of fuel on credit to help SriLankan Airlines run losses.
“Though SriLankan agreed to a repayment plan it had not happened,” Ranatunga was quoted as saying Monday.
“At the moment talks are underway at ministry secretary level. If that is not successful we will discuss at miniterial level. If that does not work we will have to deal with it at cabinet level.
“SriLankan Airlines is a state enterprise and we must protect it. If we stop fuel supply there will be a big problem. But we have to made a decision in the future.”
SriLankan Airlines had run up losses of about a billion US dollars from the time ex-President Mahinda Rajapaksa terminated a management deal with Emirates airlines and appointed his brother-in-law as the airlines chairman.
The current administration appointed Suren Ratwatte, brother of Charitha Ratwatte, a confidante of Prime Minister Ranil Wickremesinghe, under whom more losses were made, earning the administration political flack.
Ceylon Petroleum Corporation was also running losses, until May as it was forced to subsidize retail fuel. Both firm have negative net assets due to past looses. The CPC was also owed 46 billion rupees from the Ceylon Electricity Board, the Sunday Times newspaper said.
CEB however pays above market price for furnace oil.
Energy utility losses are in turn covered by state banks creating layers of ‘circular debt’. (Colombo/July02/2018)