Cabinet Approved Proposal to enter into 4 long term fuel contracts

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A proposal submitted by the Minister of Power, was recently approved by the Cabinet allowing the ministry to enter into four long-term fuel contracts, aimed at procuring fuel to meet the needs of the populace. The proposal was submitted on the recommendations of the Special Standing Procurement Committee appointed by the Cabinet. 

Three of the contracts were awarded to PetroChina International Ltd., Singapore and one to Swiss Singapore Overseas Enterprises Ltd.

The contracts include:

  • the import of 1,200,000+10/5% barrels of Diesel (maximum percentage of sulphur 0.05) to be unloaded across Colombo Dolphin Tanker Berth (DTB) and Muthurajawela SPM to PetroChina International Singapore.
  • the import of 1,120,000+10/-5% barrels of Diesel (maximum percentage of Sulphur 0.05) to be unloaded by Muthurajawela SPM to PetroChina International Singapore
  • the import of 1,341,000+10/-5% barrels of Petrol (92 Unl) and 459,000+10/5% barrels of Petrol (95 Unl) by PetroChina International Singapore
  • the import of 2,700,000+10-5% barrels of Petrol (92 Unl) by Swiss Singapore Overseas Enterprises Singapore

In recent weeks there have been several discussions on the changing fuel prices in the global market and Sri Lanka’s plight with regards to that.

The Cabinet Sub-Committee chaired by Prime Minister Mahinda Rajapaksa discussed the rapid increase in fuel prices in the world market compared to 2019 and 2020. The Sub-Committee was appointed to handle matters concerning the Reimbursement of Kerosene Subsidy, Restructuring of Ports and Airports Development Tax on Crude Oil and the financial problems of the Ceylon Petroleum Corporation (CPC).

According to reports from the Central Bank, fuel prices varied as follows over the past quarter:

  • The CPC’s import price (CIF) in January stood at $ 57.65 per barrel and in February it stood at $ 64.07. 
  • The price paid in July to November 2020 averaged between a low of $ 41.77 per barrel and high of $ 47.74 per barrel. 
  • In April it stood at $ 19.56 and May $ 25.44.
  • Futures prices of Brent had risen to $ 65 per barrel in April from $ 55 in January this year.

Meanwhile the government agreed to aid the CPC through fuel price stabilisations introduced by the Ministry of Finance. Accordingly, thus far the CPC has received Rs. 50 billion. However another Rs. 79 billion is yet to be received.In addition it was revealed that daily losses incurred by the CPC had also increased.

Recent amendments to the CPC Act No. 28 of 1961, was also granted Cabinet approval enabling efforts to expand refinery capacity and boost efforts to build new refinery in the years to come.The amendments will strengthen the upcoming Bill, which will allow the implementation of a build, operate and transfer (BOT) basis refinery with an output of 100,000 barrels per day (b/d).

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