Details of the infamous CPC hedging deal resurface after 11 years

More damning details of the infamous hedging deal of the Ceylon Petroleum Corporation (CPC) have come to light once again with the revelation of a recent report by the Auditor General. In 2009, the country was shocked with the breaking news of a dubious and illegal deal which had taken place at the CPC causing huge losses of LKR 10.2 billion to the country.

The Supreme Court Judgement in January 2009 annulled all interim orders related to the hedging deals on controlling fuel prices. Since then, it has halted the hearing of the petitions against the hedging agreements citing that the Executive has failed to implement court orders.

The public interest activists were more than jubilant when it was announced that the newly created investigative arm of the then Yahapalana government, the FCID, had been directed to take over the investigations of the hedging scam and the case was referred to the AG’s Department for action in 2016.

The matter is now under the carpet or in the dustbin and the Sri Lankans with short memories are suffering without any hard feelings about the economic loss.

As per the arbitration deeds agreed upon by the parties, a sum of USD 60 million (LKR 7,613 million) had been paid to the Standard Chartered Bank (SCB) on 03 June 2013 whilst a sum of USD 27 million (LKR 3,881 million ) had been paid to the Deutsche Bank on 04 August 2016, the Auditor General's report said.  

According to the information received, the CPC had sustained a loss of LKR 13,641 million by the year 2019 due to those transactions.

The Central Bank had spent a sum of LKR 941.2 million as legal fees relating to Hedging Deals of the Corporation, and LKR 370.6 million therefrom had been incurred by the Central Bank whereas a sum of LKR 567 million had not been reimbursed by the CPC to the Central Bank of Sri Lanka during the period 2011- 2014.

However, even by the end of the year under review, a sum of LKR 3.1 million had not been reimbursed by the CPC, a government audit inspection disclosed.  

Furthermore, a case had been filed by the Commercial Bank at the Commercial High Court of Colombo against the Ceylon Petroleum Corporation with respect to a right of USD 8.6 million.

That case however was still progressing even by the end of the year 2019, the report divulged.