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Tuesday, 12 October 2021 02:28 - - {{hitsCtrl.values.hits}}
Energy Minister Udaya Gammanpila yesterday justified efforts to secure a $ 2.5 billion loan to settle dues of Ceylon Petroleum Corporation (CPC) after SJB MP Dr. Harsha de Silva on Friday had cried foul over the modus operandi.
De Silva told Parliament that the loan was to be sourced from a company by the name ‘Concept Global,’ said to be owned by one Kenneth De La Motte, who the MP said was to also pocket a commission of 7% or $ 175 million.
De Silva added that the address of this company was in Rajagiriya and that when he had visited the location there was no name board, just an ordinary house.
Energy Minister Gammanpila said yesterday that the CPC owes $ 3.6 billion to the Bank of Ceylon and People’s Bank, incurring an interest of 5.5%. He said that there had been instances when multiple parties had offered to lend to CPC at low cost but the State entity opted to borrow from the local banks, thereby increasing the debt burden.
He said to address this he had sought Cabinet approval to call for Expression of Interests from interested parties to source low cost funding. However, based on the advice that if such an exercise failed given the downgrade of sovereign rating and foreign exchange crisis, the Finance Ministry had recommended that various unsolicited offers made for funding be considered.
Only one party, the US New Jersey-based PSL America Inc. had made a favourable offer, whereas others had required guarantees from international banks. The Procurement Committee of the Finance Ministry had recommended PSL America based on which the Energy Minister had submitted a memorandum to the Cabinet for approval.
Gammanpila said that the 7% commission or levy was in view of Sri Lanka’s credit rating downgrade as well as issues over the CPC’s balance sheet. However, the interest charged on the $ 2.5 billion loan was only 3.25% (as opposed to 5.5% by BoC and People’s Bank).
“The low interest cost ensures a large saving for CPC, hence it was recommended,” said Gammanpila, who added that the Government would have faced criticism for turning down such an offer when available. “If we get this loan it is good for the CPC but if rejected we can’t do anything.”
