SINGAPORE September 16, 2006 (LBO) – Historically high global oil prices have overtaken a three decades old ethnic conflict to emerge as the biggest challenge Sri Lankan economy has to face in recent times, the country’s Central Bank governor said Friday. We like to keep the discussion channels open between the World Bank and the IMF, you never know when you need them. We want to tell them of our own homegrown plans to tackle reforms the best way we can. Oil, for us now, is a bigger threat for our economy than terrorism, Governor Nivard Cabraal told LBO in an interview on the sidelines ahead of next week’s World Bank-IMF meetings here.
Sri Lanka, he says is working towards hedging nearly all its annual 30 million barrel oil needs, to take cover against galloping crude prices.
The South Asian Island is expected to pay around 2.0 billion dollars on oil purchases this year, higher than 1.6 billion dollars paid last year.
The government is now keen to cap the country’s oil bill at 1.8 billion dollars next year by using hedging instruments, like oil futures and options, to cushion us against volatile prices, he said.
State-run Ceylon Petroleum Corporation (CPC) is currently devising a strategy, with a workable model to