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CPC still fuels CEB despite big threat

28 Mar 2021

  • Threats to cut fuel supply fall on deaf ears

  The state-owned Ceylon Petroleum Corporation (CPC) was unable to follow through with its threats of issuing fuel to the Ceylon Electricity Board (CEB) only if the institution pre-pays for the fuel consignment, as apparently CPC still issues fuel for the CEB whether they are paying for it or not, The Sunday Morning Business learns. The CPC, a few weeks ago, told us that it would suspend the fuel supply to the CEB unless the institution pays for the fuel before the CPC releases the consignment, and this arrangement was set to come into effect from 15 March and be in effect until the CEB sets off its colossal sums of debt to the CPC. This was reportedly communicated to the CEB through a letter by the CPC management.  Speaking to us, CPC Deputy General Manager of Finance Varuna Nilanga Weerasooriya said that the CEB did not heed the warning by the CPC. “They are not paying for the fuel. However, we also could not stop the fuel supply to the CEB, as it would have resulted in an islandwide electricity cut. Therefore, we have sent a letter of request to the Ministry of Finance to look into these issues,” Weerasooriya stated. Commenting further, Weerasooriya admitted that the CPC is not in a position to take any other actions apart from informing the CEB of a supply halt via a letter. According to him, the CEB was purchasing fuel worth Rs. 2 million every month for which they have not been paying money. Nonetheless, even when it does pay, the CEB pays only a very minimal amount , around Rs. 100-150 million, which is not enough, as they have an outstanding of Rs. 72 billion, he said.  Meanwhile, when contacted earlier this month, CEB Chairman Eng. Vijitha Herath vehemently denied having received such a letter. “Both are government institutions. Without oil, we cannot operate, and we do not have enough money, as we are giving a subsidiary to people,” he said. Elaborating on the subsidiary, Herath stated that the selling price of a unit of electricity is Rs. 16 while the cost per unit of electricity generation is Rs. 23, meaning the price of a unit of electricity is being lowered for the benefit of consumers. The payments that have so far been made to the CPC by the CEB was the money generated from tariffs, he added. Commenting further on the woes of electricity pricing, Herath added that the CEB is planning to minimise its dependency on diesel usage by introducing a new power plant that would generate 30% of the total national requirement. “This is a large power plant that would be established in eight years. The last plant to be established was the Norochcholai (Coal Power) Plant in Puttalam in 2014. After that, no major power plants were introduced to Sri Lanka. We are increasing the capacity step by step; in the meantime, we are reducing the dependency on diesel for power generation. There are definitely issues, but after all, our ultimate goal is to make the CEB profitable,” he added. Herath said that due to the government concession on fuel prices and increased demand for electricity driven by the pandemic, the CEB’s losses were reduced to Rs. 45 billion, whereas the estimated loss was Rs. 90 billion. In his concluding remarks, he mentioned that the Ministry of Finance should fund the CEB in order to settle the debts, adding: “This happened last year. We got a fuel subsidy of Rs. 14 billion from the Treasury. Without a subsidy, we may not be able to repay.” We also spoke to Ministry of Finance and Treasury Secretary S.R. Attygalle, who mentioned that if there are any problems faced by both of these government institutions, the Government and the Ministry will step in and sort it out. In August 2020, the CEB settled half of the outstanding payments to the CPC by using the Government’s Fuel Price Stabilisation Fund of Rs. 48 billion. According to Ministry of Energy Spokesman Dharma Wanninayake, who spoke to us in August last year, the CEB’s outstanding debt to the CPC was 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 stated at that point.


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