Diesel Move

Jan 17, 2007 (LBO) – Sri Lanka's state-owned Ceylon Petroleum Corporation (CPC) has struck a deal with Trafigura, a petro firm in Singapore, to get up to 500 million dollars of supplier's credit for diesel, a top official said. Trafigura will give CPC 6-months of supplier's credit at London Interbank Offered Rate plus 1.6 percent, CPC chairman Ashantha de Mel told reporters.

The contract goes into effect in March.

CPC already has a credit facility from Iran for seven months of crude purchases or around 700 million dollars. Each month CPC imports around 100 million dollars of crude, de Mel said.

The first four months is interest free and the balance 3 months comes at LIBOR plus 0.5 percent.

The Trafigora contract allows CPC to buy diesel at two US cents below benchmark prices, de Mel said.

"That means there are no shipping or other charges," de Mel said. "Otherwise if you normally take, the premium today is around 1.10 cents per barrel.

"The premium means, including shipping and whatever additional charges. So we are basically saving 1.12 cents a barrel."

CPC's 50,000 barrels a day refinery is to be closed on January 21 until March. But de Mel said the utility has already stocked up on refi