Apr 17, 2012 (LBO) – Sri Lanka’s state-run Ceylon Petroleum Corporation lost 94 billion rupees in 2011 up from 27 billion rupees a year earlier, largely due to below cost sales to a power utility, official data showed. Sri Lanka’s Central Bank in its annual report said a key reason for the loss was sales of heavy fuels at subsidized rates to Ceylon Electricity Board.
Sri Lanka’s post independent rulers routinely manipulate energy prices as a vote buying gimmick, resulting in high borrowings to finance losses, or reductions in tax revenues, which then triggers balance of payments crises.
Officials had earlier said that CPC’s losses for 2011 were estimated at 89 billion rupees, and it was expected to lose 68 billion rupees even after a shock price adjustment in February 2012.
The Central Bank said state agencies owed 115 billion rupees to CPC by year end. Other reports indicated that state-run airlines losses were largely financed by the CPC through fuel taken on credit.
“[C]ontinuous operational losses of CPC have resulted in a significant loss in tax revenue to the government and high borrowings from the banking system to finance working capital requirement,” the Central Bank said in its 2011 annu