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Did not approach China for oil: Udaya Gammanpila

10 Oct 2021

 
  • Gammanpila denies seeking credit line from China
  • Ministry claims there’s no need to purchase extra fuel
  • Says it has 3 long-term contracts with PetroChina
    By Yakuta Dawood Despite local media reports stating that the Ministry of Energy will be seeking assistance from China to purchase more fuel on a long-term credit basis, Minister of Energy Udaya Gammanpila vehemently denied such an allegation. When The Sunday Morning Business inquired if he had mentioned to local media that Sri Lanka had held discussions with China through the Chinese Ambassador to purchase fuel for six months on a sovereign bond – debt security issued by the Government to raise money for financing government programmes – the Minister responded in the negative. Meanwhile, Ministry of Energy Secretary K.D.R. Olga confirmed that the Ministry will not be approaching the state-owned China National Petroleum Corporation (PetroChina) for any sort of fuel purchase arrangement on the basis of a long-term credit line. Explaining further, she stated that there was no need for extra purchases from China, as Sri Lanka already had three long-term contracts with PetroChina, which were officially signed based on open competitive bidding in the recent past. “The two long-term contracts signed with PetroChina are not credit lines, but were awarded based on the open competitive bidding procedure, as China was the lowest responsive bidder. Accordingly, it was awarded to them based on three long-term tenders, now set to expire in January 2022,” she explained. Olga, last week, told us that as per the recent discussions between Minister Gammanpila and UAE Embassy in Sri Lanka Acting Head Saif Alanofy, Sri Lanka will be seeking to obtain crude oil and petroleum products from the UAE for a credit period of six months, which could be extended as required. “As per the agreement, we will be obtaining crude oil on a credit basis for a period of six months. Sri Lanka is required to notify the Abu Dhabi National Oil Company (ADNOC) of our crude oil and petroleum product requirements 90 days in advance,” she said. When asked about the value of the credit facility, Olga mentioned that discussions between the stakeholders were still ongoing in that regard. However, according to reliable sources, it would be worth approximately $ 2 billion. Meanwhile, she had added that the Ministry was contemplating a fuel price hike, where discussions were ongoing for an appropriate mechanism to implement the same if they had no option but to increase prices, abandoning the fuel pricing formula the former Government introduced in May 2019. Olga had stated that the Ceylon Petroleum Corporation (CPC) was suffering significant losses, as the global per barrel cost was above $‌ ‌80‌ in comparison to $‌ ‌70, which was when local oil prices were last revised. “Sri Lanka is facing a twofold burden: One due to surging global oil prices and the other due to the rupee depreciation. Therefore, discussions have begun with the Ministry of Finance to find an appropriate mechanism to resolve the issue. Perhaps the prices could be revised again, but the decision is not yet finalised,” Olga explained last week. According to her, the CPC was incurring a loss of Rs. 20 per litre on products such as Lanka auto diesel and Lanka super diesel. After maintaining the local fuel prices for 21 months, the Government revised the prices in June this year. Accordingly, the price of a litre of 92 octane petrol was increased by Rs. 20 to Rs. 157, 95 octane Euro by Rs. 23 to Rs. 184, diesel by Rs. 12 to Rs. 111, super diesel by Rs. 12 to Rs. 144, and kerosene by Rs. 7 to Rs. 77.


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