Sri Lanka petroleum utility allowed to buy foreign exchange from market

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation would be allowed to buy foreign exchange directly from the entire foreign exchange market instead of only state banks, Petroleum Minister Udaya Gammanpila said.

The CPC was the biggest buyer of foreign exchange in Sri Lanka purchasing over two billion US dollars a year.

“Considering this, with the approval of the central bank cabinet decided yesterday to grant powers to the CPC to purchase foreign exchange directly from the market,” Minister Gammanpila told reporters Tuesday.

“Until now the massive quantity of foreign exchange required by the CPC could only be sourced from the Peoples’ Bank and Bank of Ceylon.”

He said the cabinet expected the move to help keep the exchange rate stable and also allow the CPC to get dollars at a better price.

Minister Gammanpila said a cabinet also appointed a sub-committee headed by the Prime Minister was appointed to give recommendations to strengthen the finances of the CPC.

Ministers of power and energy, industries and fisheries were members of the committee.

The CPC had generally sold kerosene at a loss and overpriced furnace oil to industries and the Ceylon Electricity Board, analysts say.

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In 2018, authorities stopped the CPC from buying dollars in the market using rupees it had got from a price formula, and made it take loans, triggering a 80 billion rupees and sabotaging the then Finance Minister Mangala Samaraweera’s price formula.(Colombo/Feb16/2021)

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