Business

Half of CEB debt to CPC settled 

By Madhusha Thavapalakumar

About half of the Ceylon Electricity Board (CEB)’s outstanding payments to the Ceylon Petroleum Corporation (CPC) were settled by the Ministry of Power and Energy recently using the Government’s Fuel Price Stabilisation Fund, Ministry Spokesman Dharma Wanninayake told The Sunday Morning Business. 

The Ministry has made the settlement utilising Rs. 48 billion from the Fund created by increasing the Import Duty on a litre of local fuel when global oil prices hit negative levels during the peak of the pandemic a few months ago. 

Wanninayake stated that the Ministry had to take this decision as the CEB’s debt to the CPC is a long-standing issue that was impeding the growth of two state institutions. 

“The CEB’s outstanding debt to the CPC is Rs. 93 billion. We have paid Rs. 48 billion out of it and the balance outstanding payment at the moment is Rs. 45 billion. This is a major relief to the CPC to utilise that money and settle their pending payments and undertake development activities,” he added. 

The Government owes a whopping Rs. 135 billion to the CPC for various services including fuel subsidies and the CEB’s pending payments, according to the CPC. Out of this, Rs. 93 billion of the outstanding payments of the CEB to the CPC is since February 2019.

The CPC provides fuel for the CEB under a credit limit of Rs. 80 billion per month. There were occasions where the CPC discontinued fuel supply to the CEB when they exceeded the credit limit, which resulted in the CEB opting for power cuts around the island. Poor decisions made on cancelling electricity power plant projects and emergency power purchases at expensive prices are alleged to be the reasons behind the CEB’s losses over the years. 

The Government increased the duty on petroleum imports of the Lanka Indian Oil Corporation (Lanka IOC) and CPC with effect from 13 March. The import duty was increased to prevent excessive profits being made by Indian oil giant Lanka IOC which had until recently resulted in a massive loss of foreign reserves of the country. 

Accordingly, the revised import duty per litre of 92 Octane petrol is Rs. 12. The overall recoverable import duty on 92 Octane petrol is Rs. 30. Prevailing customs import duty per litre of 92 Octane was Rs. 35. Meanwhile, the revised import duty per litre of 95 Octane petrol is Rs. 15, per litre of Super Diesel is Rs. 20, and per litre of Auto Diesel is Rs. 11.

Briefing The Sunday Morning Business on the reason behind the increased tax, subject Minister Mahinda Amaraweera in early April noted that while the global oil prices were hitting their lowest rates in decades, oil prices in the country were maintained at their current rates. Therefore, the Government was taxing the additional profit importers made. 

Utilising the increased import duty, Sri Lanka has built a Rs. 200 billion Fuel Price Stabilisation Fund which is intended to be used to repay the outstanding debt of the CPC and the CEB. Wanninayake stated that out of this Rs. 200 billion, Rs. 48 billion has been used as a first step to repay the CEB’s debt to the CPC.