Monopoly to LIOC would impact politically and economically– Handunnetti
By Sanjaya Nallaperuma
JVP MP Sunil Handunetti charged that the government plans to completely handover the distribution of oil to the Lanka Indian Oil Company (LIOC) and thereby create an oil monopoly in the country. While refined oil is imported by both the Ceylon Petroleum Corporation (CPC) and LIOC, non-refined oil is imported by CPC.
Handunetti further charged that the government is planning on permitting LIOC to import non-refined oil in the foreseeable future. “Presently, CPC is cash-strapped and is therefore not in a position to import fuel from Iran,” he said, adding, “and due to a shortage of finances no bank is willing to open an account for CPC. This turn of events has prompted the government to seek the help of LIOC to import crude oil as they are in a financial pickle at the moment.”
Iran still in the picture
The JVP MP said that the government has handed over the business of importing fuel from Tehran to LIOC, being fully aware of the crisis facing the Gulf state. He said that due to political uncertainty and the economic sanctions on Iran, the question arises as to whether it is prudent on the part of the government to import fuel to Sri Lanka from Iran through LIOC.
Sunil Handunnetti went on to say that due to economic embargos placed on Iran, Tehran would not be able to provide an uninterrupted supply of oil to Colombo – even if the government signed an agreement in that regard.
Sri Lanka has in the past been importing 30 per cent of its fuel needs as crude oil, the quantum being 135 thousand metric tons, annually, which is refined at the Sapugaskanda Oil Refinery prior to distribution. Handunnetti said that if the government hands over the task of importing crude oil to LIOC the income that would accrue to CPC would be lost, citing the loss of by-products as well through the process of refining crude oil.
He also alleged that LIOC officials had visited the Sapugaskanda Oil Refinery to study how it works, which in his view is further proof that they are in the process of taking over the task of importing to, and refining crude oil, in Sri Lanka with the blessings of the government. Handunnetti warned that if that were to happen it would spell doom to Sri Lanka’s fuel industry.
“If that becomes a reality, it would have a direct impact on the country - politically and economically. It could also affect the country’s sovereignty as Sri Lanka’s economy runs on the rail track of fuel distribution. In the event of a strike at CPC the economy would be affected. As such, if LIOC is given the monopoly for the import, refining and distribution of fuel it would tantamount to tampering with the economy, and the government should be held responsible for the consequences thereof,” he said.
Responding to a question in this regard, Minister of Petroleum Resources Susil Premajayanth dismissed the views aired by Handunnetti saying that the government has made no such decision – vis-á-vis handing over importing, refining and distributing fuel, to LIOC.
The minister said, “I think MP Handunnetti has been misled by someone and that is why he is spreading false stories. If anyone has any concerns they should ask the government instead of speaking to other people.” He added that it was the SLFP-led UPFA that had taken over the CPC when it was on the brink of being privatized. He also stressed that any person who can think clearly will not believe such talk implying that the government is to privatize the importation, refining and distribution of crude oil. Minister Premajayanth also said that the country’s demand for crude for the current year has already been met by CPC with the Ministry of Petroleum Resources planning on bringing down several shiploads of crude oil from Teheran before the end of the year.
Meanwhile, sources from the ministry told LAKBIMAnEWS that once Iran’s quota is over, the government would seek to meet the growing demand for oil from Muscat (Oman) and Riyadh (Saudi Arabia).
According to the Central Bank report, the demand for fuel had gone up by 15.3 per cent in 2011. The report also states that the CPC has been in dire financial straits in the past few years. CPC’s operational loss which was Rs. 27 billion in the year 2012 had shot up to Rs. 94 billion in 2011. Juxtaposed to this, several state departments and corporations owe CPC a whopping Rs.115 billion for having supplied fuel on lease as well as on other terms and conditions, all of which have directly contributed towards CPC’s current unhealthy financial situation.