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Missing the woods for the trees

Aug 17, 2011 2:30:04 PM - www.ft.lk

THE Ceylon Petroleum Corporation (CPC) seems to be missing the woods for the trees. Recently Minister Susil Premajayanth decided to order all Ceypetco outlets to issue receipts for every purchase of fuel. While this is important, the officials must also keep in sight the fact that there are many problems within the CPC that need to be ironed out first.

The CPC is still reeling from the issue that arose over the 22,000 tonnes of substandard fuel that imported and distributed in the country. Thousands of vehicles were damaged and they are yet to receive compensation. The officials who were responsible for this massive fraud are yet to be singled out and held responsible for the millions of damage that they caused. Moreover, the people who had their vehicles damaged, but cannot appeal for compensation will remain without any form of assistance. For the lucky few who managed to meet the requirements of the CPC, the wait will be long and hopefully not fruitless.
How is it that the CPC can make massive losses year after year and not be held accountable for its excesses is incredible. The feeling of impunity has become part of the operational culture of the CPC – to the point that it is expected to mismanage and waste resources. It has been estimated that last year the CPC made losses in excess of Rs. 29 billion. It posted up a bill of Rs. 26.2 billion in 2009 and loan burden of Rs. 68.4 billion. It is owed money by the Ceylon Electricity Board (CEB) and many other institutions and in turn has to pay massive loans. The CPC balance sheet does not make for happy reading, but for long stretches of time it has not been addressed adequately.
The stance that losses are normal and eternally acceptable because the CPC provides subsidised fuel is unwise, to say the least. In many instances the losses that are incurred by the CPC are due to epic levels of mismanagement rather than the increase of subsidies provided by the organisation. The Minister continues to insist that the CPC losses are due to the fact that currently Rs. 41, Rs. 33 and Rs. 2 of losses are incurred per litre respectively from kerosene, diesel and petrol.
The fact that the CPC is contemplating several measures such as re-entering bunkering and marketing of tar and furnace oil to minimise losses needs to be seriously considered under this light. As a corporation that has been heavily politicised and making losses almost since it was begun, the chances of the CPC being able to branch out into new businesses and make a success out of it is questionable. Most State-owned enterprises cause significant wastage of public money and even though the Government has agreed to make the CPC and CEB profit making under the International Monetary Fund programme, there is no indication that this will be achieved in the near future.
Therefore, one would think that the CPC has much more serious issues to work on and prove to the people their sincerity in increasing efficiency and good governance rather than dealing with surface issues like dispensing of receipts. There are bigger trees in this wood to worry about.