CPC eyes strategic projects to cater to future demand, cut costs

While seeking the government’s intervention to support several upcoming mega projects earmarked by the Ceylon Petroleum Corporation (CPC), Chairman Dammika Ranatunga underscored the need to take proactive policy initiatives to take the CPC towards a pathway to progress, at a press conference at the Hilton Colombo yesterday.

The CPC has currently undertaken a plethora of strategic plans which include infrastructure modernizations and expansion, aviation industry supply expansion, islandwide storage and distribution enhancement, overall sourcing and service improvements, etc.

Sharing insights into these strategic projects, Chairman Ranatunga stressed that most of the projects earmarked by CPC will be undertaken with internal financing and the CPC is seeking the government’s support through budgetary allocations only to finance some of the mega projects.

To this end, CPC has held discussions with the Finance Ministry to take these projects forward in a speedy manner. According to Ranatunga, the CPC is waiting for a positive response from the Finance Ministry in this regard.“If we can expedite these projects with the necessary financing, we will be able to improve our financial performance and hope for a better future.”

The CPC has accrued financial losses amounting to billions of rupees due to fuel concessions afforded to the country in the midst of increased fuel import costs, rupee fluctuations and non-payment of monies due to it from state-owned enterprises.

Despite these impediments, the CPC is taking aggressive steps to increase profitability, productivity and savings in the immediate future.  

The resulting profitability and its benefits in the short and long-term will be passed on to the public.  

Giving a bleak picture of the CPC’s financial position, Chairman Ranatunga stated that non-payment of dues by the state-owned institutions exceeded Rs 60 billion.  

The CPC currently owes a thumping amount to two state banks and the main cause, according to Ranatuga, is that the CPC sells all the products at a cost lower than the import price.  

Under this circumstance, the CPC is currently paying a massive monthly interest for these loans. The foregone revenue due to price concessions the CPC has to offer currently stands at Rs 68 billion for the first nine months of 2017.  

Furthermore, Ranatunga stated that the CPC has not made a formal request similar to the request made by Lanka IOC to increase the price of fuel and the current policy of the CPC is to manage the expenditure without passing the burden onto consumers.  

 

Sapugaskanda refinery capacity to be expanded

Disclosing future plans in relation to the Sapugaskanda refinery, CPC announced that in order to meet the growing demand for fuel in coming years, existing capacity at the refinery will be expanded and the proposed project will result in the CPC saving US$ 400 million per annum.

The cost of the expansion will be US$ 2.3 billion and it would also enable the refinery to supply 100% of the national requirement by 2025 - approximately 120,000 barrels per day.

According to the CPC, the capacity can be increased to 140,000 barrels per day, depending on the changes to demand that may arise in the future.

Also, upon the completion of the new terminal at the Bandaranaike International Airport (BIA), CPC intends to install a state-of-the-art fuel hydrant system to supply fuel to planes that are parked there. 

It is expected that the proposed projects will increase efficiency, enabling one aircraft to be served in a much shorter time and expanding capacity at the BIA.

With these initiatives, the CPC intends to uplift the current international rating of the BIA refueling terminal issued by the Joint Inspection Group (JIG) from ‘Good’ to an ‘Excellent’ rating.

 

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