Sri Lanka’s CPC loses Rs21.4bn in 2019 four months; forex losses Rs9.1bn
ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation lost 21.4 billion rupees in the first four months of 2019, and 9.1 billion rupees were forex losses, a finance ministry report said.
The CPC made an operational loss of 11.14 billion rupees. The finance ministry said it was due to the lack of a pricing mechanism for aviation fuel, power sector fuel and kerosene.
But it also made a 9.1 billion rupees forex loss.
It is not clear how the forex loses came in 2019, because the rupee did not depreciate in 2019, unless it was related to stock holding or forward cover.
"The depreciation of rupee during the period has also impacted adversely on the CPC’s performance in terms of increasing their importation cost and the dollar-denominated payable to banks," the finance ministry said.
In 2018, the CPC lost 103 billion rupees and 82 billion rupees came from forex losses, as a soft-peg with the US dollar collapsed from 153 to 182 to the US dollar due to central bank targeting the exchange rate and interest rates (by printing money) at the same time.
It is not clear why CPC is made to borrow large volumes of dollars and how exactly the forex losses are being generated. (Colombo/Jul01/2019)