Sri Lanka cabinet not aware of a US$2.5bn loan to CPC: Minister Pathirana

ECONOMYNEXT – Sri Lanka’s cabinet is not aware of a 2.5 billion US dollar loan which state-run Ceylon Petroleum Corporation had reportedly negotiated with some foreign parties after unsolicited offers, Co-cabinet spokesman Ramesh Pathirana said.

“We are not aware of such a thing,” Co-Cabinet Spokesman Ramesh Pathirana told the weekly cabinet news briefing.

State-run CPC owes around 2.0 billion US dollars to two state banks and more than a billion US dollars in suppliers credits.

The CPC is made to borrow dollars and run up large debts, in the years that the central bank prints money to keep rates down and triggers currency crises, critics have said.

“A cabinet appointed Procurement Committee has studied the proposals and a decision has been made to further negotiate the terms on obtaining the loans,” the Sunday Times reported on Sept. 12.

“The offers have been made to obtain the loans from US and European insurance and pension funds.”

The newspaper had earlier reported had earlier quoted Petroleum Ministry officials saying that the corporation was paying high levels of interest to state banks and it was looking for loans at low rates perhaps 3.0 percent.

A negotiation committee was then formed to talk with those who offered loans.

Opposition legislator Harsha de Silva told parliament earlier this year that he had asked Sri Lanka’s Treasury Secretary about the planned CPC loans during a parliamentary committee oversight meeting.

He said he was told that the committee was appointed to negotiate after several proposals came to his desk.

De Silva said Sri Lanka should take care to ensure that the money would not be part of some money laundering scam.

Sri Lanka’s The Lankadeepa newspaper reported that negotiations had taken for the loan with a US-based company called ‘Concept Global’. (Sept28/2021)