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Hedging deal: CPC loses appeal

27 July 2012 04:58 pm - 38     - {{hitsCtrl.values.hits}}

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Sri Lanka's state-run oil company-Ceylon Petroleum Corp(Ceypetco)- lost an appeal against a London court ruling which ordered it to pay nearly $162 million plus interest for non-payment of dues to Standard Chartered Bank linked to hedging deals, government officials said on Friday.

Last year, Ceypetco appealed against the ruling in favour of Standard Chartered, which went to court after the oil firm refused to make hedging payments to the bank.

"It has been reported that the order is against us," the island nation's Attorney General Palitha Fernando told Reuters. "First of all we have to see what the order was, then we are looking at (the) possibilities of appealing in the House of Lords."

Oil Minister Susil Premajayantha said: "We are in consultation with the Attorney General's department to appeal against the judgement."

Ceypetco had refused to make hedging payments to five banks including Standard Chartered, Citigroup and Deutsche Bank .

The state oil company, which imported some 26 million barrels at a cost of $2 billion in 2007, needed to hedge its purchases of crude oil and refined products on the international market.

It was exposed to the record oil rally of 2008, when oil hit an all-time high above $147 a barrel for U.S. crude CLc1 in July, before crashing to less than $40 a barrel in December of that year.

Standard Chartered argued that Ceypetco had always been aware that a fall in oil prices would have made it liable to make payments to the UK-based bank.(Reuters)
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  Comments - 38

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  • Marikkar Friday, 27 July 2012 05:21 PM

    It is of no use to think of reappear for this case, please bring the high authorities and high handed people to book and obtain court order to pay this huge amount. Payment of which by the public is impossible and beyond their capacities. Please note that all the big shots in the govt. are responsible for this illegal transaction. Please reveal the facts to the public.

    Vattakka Friday, 27 July 2012 05:43 PM

    First of CPC should understand what's hedging....simply to say, it's an agreement to buy fuel at a fixed price in future (in order to overcome volatility). Volatility can be increase or decrease in oil price. Once you sign a hedge it means you are bind to buy fuel at that price regardless of what could be the market price. In this case what happened was, unexpectedly the oil price dropped record high low. Eventually this hedge deal became disadvantageous to CPC. Hence they defaulted paying it. CPC should understand the fact that, in business terms hedging is where you can may gain or lose in real term but it's only for the purpose of maintaining a stabilized situation. Now who will pa this $ 162 Mn? is it going to be paid from IMF loan?

    R.Dias Friday, 27 July 2012 05:46 PM

    Mr.Minister US$ 162 mn is @ Rs 130.00 = Rs.21,060,000,000
    how many hospitals in the country could have been upgraded..? This is a crime....a bloody crime..you have robbed the beggars.

    Arun Friday, 27 July 2012 06:05 PM

    Yesterday only the govt got a bit of good name by stopping power cut.. Today they lost it by miles.. From the top to bottom, the bloody idiots in the ministry and CPC don't know anything about these financial stuff.. If you have ever been to the corp, you would understand that even the minor staff act as they own the place. Ultimately, innocent citizens have to pay the price.

    kumaraya Friday, 27 July 2012 06:01 PM

    That is right. Appeal to the House of Lords (provided Mr. Weerawansa agrees) and when that too has been turned down, more of our borrowed Foreign Exchange has been thrown after bad money, then appeal to... ?

    ONE day, there will come a day of reckoning.

    Don Friday, 27 July 2012 06:16 PM

    Kauda hora?

    Siripala Friday, 27 July 2012 06:24 PM

    As cash is just a piece of paper with a number printed on it, STD. CHTD. Bank should get down to the Central Bank and demand to be paid in gold. Now it makes sense.

    Yuri Friday, 27 July 2012 06:10 PM

    Call IMF for another Loan. miss management, is there anyone to resign from the post or will get promote in Lankan Style

    Political Illiterate Sunday, 29 July 2012 07:18 AM

    Duwi,
    A good cricketer may not be a good cricket selector too!

    Kandana Saturday, 28 July 2012 01:11 PM

    CPC have no right to challange banks you have signed the documents do the payment before more interest accumilation.
    At the time forcasters were arguing about $200 a barrel. I see the resons for this hedging deal. It is a gamble you lost you have to pay it now.

    Matalan Saturday, 28 July 2012 01:26 PM

    Once pledged, you are legally bound to honour the agreement. It's silly to think otherwise. Any dragging of feet will only amount to added legal fees and charges. So pay it without delay and then hold an inquiry. Don't let anyone blame the 'Capitalist' countries for our own folly.

    peeda mossa Saturday, 28 July 2012 01:53 PM

    And the culprit of the whole fiasco is busy destroying Sri Lanka Cricket these days.

    Dalu Banda Saturday, 28 July 2012 02:07 PM

    A friendly Monkey has done the work while the king was in a long sleep.

    sahdi Saturday, 28 July 2012 02:22 PM

    HORA BALLO....

    Bonda Saturday, 28 July 2012 03:02 AM

    Somebody asked god if there would be a day of reckoning, He turns and says not during my time, so we suffer......

    Kautilya Saturday, 28 July 2012 02:47 AM

    Sack the Minister and punish the then Chairman CPC

    Fida Saturday, 28 July 2012 02:40 PM

    hmmmm ekath ehemada?

    Ranjith Saturday, 28 July 2012 03:08 AM

    How long Mr. Cabral will be in the office,... ? untill SL become Ethiyopiya.

    bash Saturday, 28 July 2012 03:14 AM

    CABRAAAAL, Why are you silent ?????? You put us into this mess

    bash Saturday, 28 July 2012 03:16 AM

    We have to reckon, they will continue to live high life

    lalith Saturday, 28 July 2012 03:23 AM

    funny how the person who is responsible the hedging deal is now the head of sri lankas cricket teams selection panel

    rikas Saturday, 28 July 2012 03:49 AM

    very good

    kolla Saturday, 28 July 2012 03:53 AM

    Hurehhhhh Asantha De Mel getting another wicket !!!.

    Richardson Saturday, 28 July 2012 03:41 PM

    If you have a hedge with out having a chain link fence,you have to water it, Chain link fences are easy to maintain.

    Richardson Saturday, 28 July 2012 03:44 PM

    Who was the Chairman of the Petroleum Corp?

    I don't think he even has a hedge at home . Just a Vatak.

    Richardson Saturday, 28 July 2012 03:59 PM

    Api dannawa

    Richardson Saturday, 28 July 2012 04:06 PM

    Sit down and take it, you voted them in

    Siri Saturday, 28 July 2012 04:53 AM

    un educated ex Chaiman created big lost to country.

    DUWI Saturday, 28 July 2012 05:01 AM

    A good Cricketer may not be a good manager. Country has to pay for actions of incompetents - square pegs in round holes.

    jayantha Saturday, 28 July 2012 04:56 PM

    Why not punishing the govenment authority like minister, chairman who was dealing with this .
    those who are in this game must had got commision so who cares now let us pay for it before we get black listed from IMF

    kaslana Saturday, 28 July 2012 05:07 PM

    Think it is time for us to bust $160 million with PR firms to clean up our image - that is if we have any image left ;)

    dass Saturday, 28 July 2012 05:18 AM

    one Pakir told a week ago, Sri Lanka can now give loans to US and other countries. Now is the time to come forward and pay the debt.

    Manu Saturday, 28 July 2012 05:29 PM

    Will appeal.. but it will be same and then we have to pay more.. with the charges for appeal,, minster think pepole can cheat saying appeal then every thing will be fine...

    same time this modays save arround $2.2 b in greek bond.. that aslo we cannot recover now..

    My worried is no one in the oppostion to ask form the governemnt ?? are they sleeping...

    This is name to few.. we are moving to wonder of asia !!!!

    Thomas Saturday, 28 July 2012 05:06 AM

    Ayio , WE ARE DONE!

    ikiboy Saturday, 28 July 2012 05:32 AM

    are you all ready for an uprising.......

    these happening wont stop until we start waking up

    bandara Sunday, 29 July 2012 04:39 PM

    and the politicos were beating their chest that we are sure to win the case. may be thought the case was run in SL courts

    Farzan Saturday, 28 July 2012 06:16 AM

    As I told several times, this also an impropper management of Public funds.

    Appuhamy Saturday, 28 July 2012 06:11 AM

    Who cares ? Neva gilunath Band Choooonnnn...!!


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