Sri Lanka state airline losses financed by petroleum retailer: report

Feb 27, 2012 (LBO) – Sri Lanka’s loss making state-run airlines have been mainly financed by Ceylon Petroleum Corporation, to which they owe 18 billion rupees (150 million dollars) in unpaid dues for fuel, a media report said. Losses for the current year so far at Mihin Air, a state-budget carrier are not known but opposition legislator Harsha de Silva has called for its closure, saying a parliamentary committee has found that it has lost or was in debt for nearly 14 billion rupees.

SriLankan Airlines had made large losses since a management contract with Dubai’s Emirates was terminated, while Mihin Air has lost money from day one.

Sri Lanka raised petroleum and power prices in February after excessive credit growth put pressure on a rupee peg.

In addition to a steady growth in private sector credit, a sudden spike in state enterprise credit was seen from May 2011. The rupee has fallen from 110 to around 120 rupees in the past year.

Sri Lanka’s Ceylon Today newspaper quoted power minister Champika Ranawaka as saying that state-run SriLankan Airlines and Mihin Air owe the petroleum firm 18 billion rupees.

Minister Ranawaka was quoted as saying that it was unfair to blame only the Ceylon Electrici