Abortive oil strike: The inside story | Sunday Observer

Abortive oil strike: The inside story

2 April, 2023

A decade ago, then-President Mahinda Rajapaksa revealed that the reason for Sri Lanka’s high debt burden was that five profitable institutions in the country were suffering heavy losses. Among them was the Ceylon Petroleum Corporation (CPC). While the CPC or CEYPETCO was suffering losses, the question was how the Lanka Indian Oil Company (LIOC) engaged in the same business at the same price points and made a significant profit.

In Singapore, all State-Owned Enterprises (SOEs) following the ‘Temasek’ conceptual theory make healthy profits. However, the situation in Sri Lanka is starkly different giving rise to calls for restructuring these SOEs.

The main reasons for their loss-making were due to waste, corruption, theft and falsely generated employee income. In addition to this acts of corruption by those in authority such as obtaining commissions and importation of low-quality crude oil also contributed to this situation. Excessive staffing of SOEs due to politicisation was yet another burden the country’s people have been forced to bear.

Therefore, President Ranil Wickremesinghe and Minister of Power and Energy Kanchana Wijesekera have now stepped up efforts to restructure these organisations. The President has gone on record saying that the State should not be engaged in business activities.

The loss suffered by CEYPETCO in 2011 was Rs. 95 billion. In 2012 it shot up to Rs. 130 billion. In 2013 it dropped to Rs. 11 billion while in 2014 it made a turnaround to make a profit of just Rs. 1 billion. But once again in 2016, it suffered a massive loss of Rs. 61 billion.

This trend continued till 2020 when it again marked a profit of Rs. 1 billion, possibly due to low crude oil prices precipitated by the Covid pandemic.

Compounded

CPC losses were compounded by the fact that some State organisations (such as the Ceylon Electricity Board and the Sri Lanka Railways) which had obtained fuel on credit had failed to repay the dues on time.

In comparison, the LIOC has marked profits from 2013 - 2020 except for in 2018 when it suffered a loss of just Rs. 0.7 billion. This undoubtedly proves that CEYPETCO too can become profitable just like the LIOC. However, the dedication of the staff as well as support from the Trade Unions (TUs) is necessary to ensure that the organisation can earn profits. But there has been a clear lack of interest to achieve this end.

CEYPETCO is obviously suffering losses due to the excess staff and the payment of various allowances on top of their regular salaries. Many have challenged the TU leaders of the organisation to reveal their salaries and other allowances. While State assets must be protected, this must be carried out by the staff instead of leading it to financial ruin as seen today.

The announcement that three new suppliers (United Petroleum of Australia, Sinopec of China and RM Parks of the USA) will be allowed to enter the fuel market in Sri Lanka led to a strike at CEYPETCO against the decision to lease 450 fuel stations to these companies out of 1,200. The protest turned into a strike and the Minister vowed to take legal action against those obstructing fuel distribution activities.

Compulsory leave

As TU leaders including those from some ruling party-affiliated unions defied the Minister, steps were taken to send 20 staffers on compulsory leave and ban them from entering various CEYPETCO premises.

The Minister also said individual charge sheets will be handed over to them. Among them was at least one retired CPC employee and investigations are on to find out how he gained entry to the premises as he no longer has a valid company ID card.

Meanwhile, investigations have also been launched into trade unionists’ actions on the day. While fuel distribution was normalised rapidly, the queues seen on March 28 were reduced gradually the next day with the support of the military and the police.

Accordingly, 574 bowsers containing 6,600 litres of auto diesel and 512 bowsers containing 6,600 litres of 92 petrol were distributed on March 29 between 6 a.m. and 4 p.m. thus making the TU action completely unsuccessful. It is unfortunate that TUs do not understand that the rights of employees can only be protected by safeguarding their organisation(s) and that they must support officials to combat corruption within.

Pix By Rukmal Gamage

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Fuel price drop leads to transport fare decrease

The Government decided to reduce fuel prices from March 29, mainly as a result of the appreciation of the rupee and the reduction of oil prices in the world market. Accordingly, a litre of petrol 92 was reduced by Rs.60, a litre of petrol 95 by Rs.135, a litre of auto diesel by Rs.80, a litre of super diesel by Rs.45 and a litre of kerosene by Rs.10, in line with the price formula introduced by the Government.

The new prices of fuel were shown as Rs. 340 per litre (Octane 92 petrol) and Rs. 375 per litre (Octane 95 petrol). Also, the price of a litre of Lanka auto diesel now is Rs. 325 while the price of a litre of super diesel has been set at Rs. 465 and the price of a litre of kerosene is now Rs. 295.

The National Transport Commission (NTC) recommended that the bus fares should be reduced by 12.9 percent and the bus fare was also reduced accordingly. The minimum fare of Rs 34 has been reduced to Rs 30 and the second fare of Rs 42 has been reduced to Rs 37. The fares of highway buses and luxury A/C buses have also been reduced accordingly.

Kilometre

Three-wheeler owners’ associations have also said that the fare will be reduced to Rs. 80 from the second kilometre. But this has not been put into action yet. The United Lanka Container Transport Vehicle Owners’ Association has also decided that the container transport service charges will be reduced by 8 percent. School van owners are also likely to follow suit next week.

The following graph shows oil price changes.

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