Oil Bets

Nov 28, 2008 (LBO) – Sri Lanka’s supreme court has ordered the state-owned oil refiner, Ceylon Petroleum Corporation (CPC), to suspend controversial hedge payments to banks until a central bank probe into the matter is over.

CPC chairman Ashantha de Mel has maintained that the deals were done on cabinet instructions which had not allowed the petroleum firm to make up front payments to buy less risky hedges.

Estimates of losses in the contracts with Citibank, Standard Chartered, Deutsche Bank and smaller contracts with two local banks could have ranged between 300 to 400 million dollars.

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It also ruled Friday that President Mahinda Rajapaksa should take over the petroleum ministry from minister A H M Fowzie..

The court also ruled that the chairman of the CPC, Ashantha de Mel, be replaced.

The ruling came in the wake of a controversy over the CPC oil hedges, which are now the subject of a probe by both the central bank and a team of Cabinet ministers.

The probes were launched after revelations that the oil hedges had turned sour and that the CPC stands to lose hundreds of millions