Sri Lanka’s CPC will stop bank borrowings to pay taxes against CPC act: Minister

May 21, 2015 (LBO) – Sri Lanka’s state-owned petroleum refiner Ceylon Petroleum Corporation (CPC) is to discontinue the process of paying taxes out of borrowed money from banks, Power Minister Champika Ranawaka said.

“We will not pay taxes which are against the CPC act, the era that we paid taxes by borrowing from banks is over, why should you borrow money and pay taxes?”

“Taxes need to be paid from your profits.” Ranawaka said.

Country’s public energy utilities earlier triggered balance of payments crises with high borrowings through banks.

Ranawaka who pledged to stop corrupt dealings in the CPC, criticized other state owned institutions for off setting losses against the CPC.

“We (CPC) will not take on any losses because of corrupt state owned institutions like Srilankan airlines or Mihin,”

“Other government institutions will not be able to set off their losses against us anymore.” Ranawaka said.

According to provisional financial statements, CPC reported a profit of 1.7 billion rupees in 2014 due to the fall in global oil prices compared to a loss of 7.9 billion rupees in 2013.

In 2012 it reported a loss of 89.6 billion rupees.

“In the future we will not take on the debt burden of others and incur any losses due to this,” Ranawaka emphasized.

According to the 2014 Central Bank annual report, improved debt recovery helped CPC to reduce outstanding trade receivables from government entities to 34.1 billion rupees at end-2014 from 53.2 billion rupees in 2013.

But the report also noted that CPC’s total liabilities to the banking sector increased by 22.2 billion rupees to 245.6 billion rupees during 2014.