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Hedging case is against SL Govt.-CPC

14 November 2012 06:52 am - 8     - {{hitsCtrl.values.hits}}


Sri Lanka's state-run oil firm Ceylon Petroleum Corporation (CPC) said that a $60 million arbitration award to Deutsche Bank early this month was against the island nation's government and not against the firm.

"It is against the government and not against us," Susantha Silva, CPC's managing director told Reuters.

On Nov. 2, officials said the state-run oil company had lost a $60 million hedging case against Deutsche Bank after a U.S.-based arbitrator ruled in favour of the bank.

In a separate statement, Silva said the CPC "wishes to categorically state that the Deutsche Bank has not obtained any arbitral award against the CPC in relation to any hedging agreement."

A Deutsche bank official in Colombo confirmed that the arbitration was against the government and not against the state-run oil firm, which refused to make hedging payments of more than $460 million to five banks including Standard Chartered, Citigroup and Deutsche.

Deutsche had asked the Washington-based International Centre for Settlement of Investment Disputes to arbitrate.

Ceypetco, 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 oil rally of 2008, when oil hit a record high above $147 a barrel in July before crashing to less than $40 a barrel in December.

In July, CPC 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.

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

  Comments - 8

  • Sareek Wednesday, 14 November 2012 08:01 AM

    Against people

    RamUK Wednesday, 14 November 2012 08:00 AM

    what difference it is going to make to the ppl?

    Mason Wednesday, 14 November 2012 08:09 AM

    Credit given to CPC because it is State run. So, either way it is going to be the Tax payer's money.

    Marikkar Wednesday, 14 November 2012 08:19 AM

    It is a foolish remark by Ceypetco Managment. Ceypetco is a government owned entity and defineltely a partner in the deal hence it is a case against CPC as well.

    adc Wednesday, 14 November 2012 08:35 AM

    Department of Management Services DG
    Ms. Godakumpara Please reply what type of Management of rule played for this case

    NA Wednesday, 14 November 2012 09:06 AM

    CPC or not, you have to pay it. It is obvious, people who run this government from top to bottom including the Central bank are bunch of morons.

    John Wednesday, 14 November 2012 09:37 AM

    The pathetic incompetency of those at the top who got away without a scratch is to be blamed solely for the huge losses - of course only in SL they cannot be held for accountability and live happily thereafter?!

    Em Wednesday, 14 November 2012 10:43 AM

    Aiyo salli.. Govt. officials & CPC management you can fool the poor people in this country men but you cant fool the world.

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