ECONOMYNEXT – Sri Lanka’s Ceylon Petroleum Corporation started to make profits from July 2022 after prices were made cost based, Power and Energy Minister Kanchana Wijesekera said.
Sri Lanka started market pricing fuel, gas and also raised electricity prices in the run up to a deal with the International Monetary Fund, as global fuel prices rose and the rupee also collapsed steeply from around March2022.
The CPC has lost 2,900 million rupees in January 2022, 12,000 billion rupees in February, 348,969 million rupees in March, 239,912 million rupees in April, 35,063 million rupees in May and 678 million rupees in July.
In July the CPC had made profits of 6,314 million rupees, in August 1,775 million rupees and in September 5,600 million rupees.
The losses in March and April came from a collapse of the rupee as loans taken to finance earlier oil purchases triggered forex losses.
The CPC now owed 751 million dollars to suppliers and also had to pay 251 billion rupees to the Treasury to repay a credit line to India, Minister Wijesekera said.
The debt service cost of the CPC was about 30 billion rupees, Minister Wijesekera said.
The CPC had also borrowed around 2.0 billion US dollars from state-run banks during previous currency crises when money was printed to suppress rates.
Sri Lanka’s CPC losses come from politician’s obsession to sell fuel below costs and macro-economist obsession to print money to keep rates down and create currency crises.
A World Bank survey found that only 2 percent of ‘experts’ in South Asia knew that central banks created currency trouble. (Colombo/Oct19/2022)