Easing Off

A stronger Sri Lankan rupee, backed by foreign aid for the reconstruction of the tsunami-battered island, should help the state’s Ceylon Petroleum Corp. repay its mountain of foreign debt, Ceypetco chairman Jaliya Madegama said Tuesday. A stronger Sri Lankan rupee, backed by foreign aid for the reconstruction of the tsunami-battered island, should help the state’s Ceylon Petroleum Corp. repay its mountain of foreign debt, Ceypetco chairman Jaliya Madegama said Tuesday. “Before the tsunami, we were in a very difficult situation and had to defer some payments for oil purchases” because the country lacked foreign exchange, Madegama told Dow Jones Newswires in an interview.

The country’s foreign exchange reserves were worth about $2.3 billion in January last year. Although not substantial, the amount was still equivalent to about three-and-a-half months of imports.

But when oil prices started rising to record highs over 2004, Ceypetco found that its costs went above budget. Sri Lanka spends between $500 million and $750 million annually on crude oil and refined products, but last year, that amount rose to $1.1 billion because of high prices, about 85% of which was attributed to Ceypetco.

Ceypetco is the main oil imp