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CPC to secure new credit tender

02 Jan 2022

  • 10 unsolicited proposals received
By Yakuta Dawood The Cabinet is to take the final decision on whom to award the tender – from roughly 10 unsolicited proposals received from international counterparts and private institutes with a low-interest rate credit arrangement – to support the Ceylon Petroleum Corporation (CPC). Speaking to The Sunday Morning Business, a highly placed source from the CPC, on the condition of anonymity, revealed that discussions, evaluation, and the decision of finalising a reliable partner are presently ongoing amongst the committee appointed by the Cabinet of Ministers. “The solution to the prevailing issue can be solved through a foreign-funded soft loan. The final decision will be announced by the Cabinet in the very near future after an in-depth evaluation and study,” the official clarified. However, when inquired regarding whom the CPC has received proposals from so far, the official refused to divulge information by stating that any revelation of names could hinder the ongoing negotiations and final decision-making process. Further, commenting on the status of the US-based PSL America Inc. credit of $ 2.5 billion at an interest rate of 3% per annum, the official stated that so far, no agreements have been finalised, as discussions are still ongoing with the counterparts. Nevertheless, Energy Minister Udaya Gammanpila, addressing the Parliament in November last year, stated that this loan has not been obtained as of yet and added that it was merely a proposal and that no commission had been paid as alleged by the Opposition. “At the time I specifically said that such a large sum of money wouldn’t be received at such a low-interest rate, and as I predicted we didn’t receive it yet. However, the Opposition from time to time keeps alleging that a loan has been taken with a commission as if they had just woken up from a dream,” he commented. The decision to seek for an international lender who would lend money at a lower interest rate to partially rescue the CPC from its debt to state banks was prompted by the fact that the entity has to pay higher interests to the Bank of Ceylon (BOC) and the People’s Bank for the money it owes to them. The Sri Lankan authorities initially requested credit from the Bank of Japan and the State Bank of China at a comparatively lower interest rate. However, Minister Gammanpila, speaking to us in June 2021, stated that after evaluating Sri Lanka’s loan request, both above-mentioned international banks refused to grant the loan of $ 1 billion at an interest rate lower than the existing rate of 5.5%. “We are in debt to the BOC and the People’s Bank. Therefore, we asked the Chinese and Japanese Ambassadors if they could provide loans to replace the existing loans with a lower interest rate. However, after calculation and evaluation, they said they can’t lower the interest rate,” Gammanpila said at the time. Meanwhile, Petroleum Corporation National Employees’ Union Chairman Samika Asithanja in September 2021 opposed the decision to seek a loan to overcome the situation. He stated that as a trade union, they do not feel it is ideal for the Government to allegedly forgo the Finance Ministry and the Treasury to obtain such a loan. “So far, we have not been notified of obtaining loans or contracts from foreign nations. We suppose they are attempting to amend the CPC Act in a bid to meet a requirement in this deal,” he alleged.

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