Escape Route

Trying to squirm out of paying mounting subsidy bills, Treasury has told state oil giant Ceypetco that it is liable to pay its claims, only if it declares a loss. Trying to squirm out of paying mounting subsidy bills, Treasury has told state oil giant Ceypetco that it is liable to pay its claims, only if it declares a loss.

The government owes Ceylon Petroleum Corporation Rs. 14.4 billion (US$ 144 mn) and Lanka Indian Oil Corporation (LIOC) Rs. 6.5 billion (US$ 65 mn) in subsidies from January to end September.

“In a discussion we had with Treasury officials two weeks ago, they told us that the Attorney General had a different interpretation of the pricing agreement,” a senior Ceypetco official told LBO.

“The interpretation was that the subsidy would not be the recommended price based on the pricing formula minus the actual selling price, but that Treasury was only liable to pay on the losses declared by the company.”

Ceypetco says it is willing to go along on certain conditions. A similar attempt with Lanka Indian Oil Corp earlier this year, backfired on the government, with the Treasury agreeing to honour its commitments.

Playing on a L