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PetroChina likely to secure SL’s January tender

28 Nov 2021

  • Existing contract expires in Jan. 2022
By Yakuta Dawood  The long-term contract to import fuel into Sri Lanka is expected to be awarded to Chinese state-owned China National Petroleum Corporation (PetroChina) from January 2022 by the Ministry of Energy, The Sunday Morning Business learns.  A spokesperson from the Ministry said it is likely that PetroChina will receive the tender for the fuel supply next year, as they already have a long-term agreement in effect to supply fuel to Sri Lanka, which is expiring in January 2022.  “During the last tender, PetroChina was awarded the contract following an open competitive bidding procedure, and this expires in January 2022. Therefore, there is a possibility of it being awarded to them again. However, we are not planning to specifically award PetroChina, since any specialised country and any registered supplier who is willing to be the lowest bidder could also secure the tender,” the official said. We also spoke to Minister of Energy Udaya Gammanpila for further confirmation in this regard. However, he refused to divulge information, and stated that a contract will be awarded in January to procure fuel for Sri Lanka.  “In January, we will look for a new tender,” Gammanpila said.  Meanwhile, the Cabinet of Ministers had recently approved a proposal made by Energy Minister Gammanpila to award a long-term contract to a Singapore-based energy and commodities company to import petrol and diesel to Sri Lanka. Bids were called from the registered suppliers of Lanka Petroleum Corporation for the long-term contract to import 1,137,500+10/-5% barrels of diesel (maximum sulphur percentage 0.05), which will run from 1 January 2022 to 31 August 2022, and 262,500+10/-5% barrels of super diesel (maximum sulphur percentage 0.001) for the same period. Bids were also called to import 1,341,000+10/-5% barrels of petrol (92 octane unleaded), which will run for a period of eight months from 1 January to 31 August 2022, and 459,000+10/-5% barrels of petrol (95 octane unleaded), which will run for the same period. Meanwhile, due to the uncertainty around the supply of fuel since the beginning of the year, the Energy Ministry has sought two credit lines, one of which is a $ 500 million credit line from India. According to Treasury and Ministry of Finance Secretary S.R. Attygalle, the credit is expected to be received by the end of this month.  Speaking to us, he stated: “Discussions are still ongoing and terms are yet to be finalised. It will be a normal three-year credit line at a nominal interest rate.” The second is the credit line of $ 3.6 billion from the Government of Oman. This credit line was approved by the Cabinet recently, and is expected to fund the purchase of fuel for a period of 12 months.  Speaking to The Sunday Morning Business earlier this month, Ministry of Energy Secretary K.D.R. Olga stated that the relevant documents were being drafted and all related matters were expected to be finalised by the end of this month. “The terms of the agreement would provide the Government with a five-year grace period and a repayment period spanning 20 years,” she noted at the time.  As learnt by The Sunday Morning Business, the total loan amount payable by the Ceylon Petroleum Corporation (CPC) as of September was Rs. 618 billion, while it pays a total of Rs. 1.2 billion as interest on these loans.  In addition, the CPC owed $ 425 million to Iran, while the Treasury owed the CPC Rs. 640 billion for providing subsidised fuel. Furthermore, the Ceylon Electricity Board (CEB) owed the CPC Rs. 50 billion for providing diesel to the CEB’s power plants. Official statistics show that the CPC’s borrowings from the banking sector had risen by Rs. 74.1 billion to Rs. 381.8 billion in 2020, or 2.5% of gross domestic product (GDP), with a large portion in foreign exchange due to policy errors.


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