CPC losing Rs. 1.8 b annually on furnace oil sale to CEB

Wednesday, 5 January 2011 00:01 - - {{hitsCtrl.values.hits}}

By Deepal V. Perera

The Ceylon Petroleum Corporation (CPC) is losing Rs. 1.8 billion yearly by incurring a loss of Rs. 20 on every litre of furnace oil sold to the Ceylon Electricity Board (CEB).

“Currently we are making a loss of Rs. 1.8 billion by selling furnace oil to the CEB at Rs. 40 per litre when we should be selling it at Rs. 60. So we are making a loss of Rs. 20 on every litre of furnace oil sold to the CEB. Because of this, we have called on the CEB to come out with a year plan indicating its oil needs so that we could manage our oil orders,” Minister of Petroleum Industries Susil Premajayanth told Daily FT.

He said that due to the recent high rainfall in the country, the CEB had increased its hydropower power generation, thereby reducing the use of thermal power.

“We have imported large stocks of oil just to meet the CEB demand and now they have stopped buying furnace oil from us for the time being. We have invested a lot on this oil and we have to pay interest on the stocks. So, in order to prevent this, we have asked the CEB to provide us with an annual plan indicating its monthly furnace oil consumption so that we could plan accordingly,” the Minister said.

He also said that the CPC was currently capable of producing 38% of the country’s furnace oil demand and the balance was being imported from international markets.

Speaking on the recent announcement that the CPC intended to enter the Liquid Natural Gas (LNG) sector, the Minister said that a cabinet paper on the subject was to be presented soon.

“So far we have received six proposals from international companies which have shown keen interest in participating in the new project. Apart from this, during this year we also hope to enter the bunkering business and start producing tar for the local industries. We also plan to set up a modern recycling plant, to recycle the discarded oil in the country,” he said.

According to the Minister, under the recycling project the CPC is hoping to collect all discarded oil in the country and recycle it to produce petrol and diesel as by-products.