Talks intensify as CPC tries to keep UL flying

The Ceylon Petroleum Corporation (CPC) would only cut fuel supplies to SriLankan Airlines if ongoing discussions on payment failed completely, Petroleum Resources Development Minister Arjuna Ranatunga said yesterday, expressing willingness to get involved personally to resolve the Rs. 1 billion payment standoff. 

Responding to reports that the CPC had informed the Transport Ministry and the Presidential Secretariat that it would stop releasing fuel to the struggling national carrier on Wednesday unless SriLankan managed to cough up Rs. 1 billion in outstanding payments, Ranatunga insisted that time remained for more discussions. 

“At the moment the Secretaries of the two Ministries are in talks. If that fails, then I will personally make an overture to the subject Minister for talks, and only if that fails will we have to consider stopping supplies. But we are aware that this is a very drastic step, and we understand that as a State enterprise SriLankan must be allowed to continue operations,” he said. 

The Minister had told reporters CPC had formulated a payment plan after several rounds of discussion with SriLankan, but the national carrier had failed to make payments according to the formula. 

“The Government’s view is that, given this is a problem between two State enterprises, it is possible to resolve this issue through negotiations. Therefore, more than stopping fuel, we will work to resolve this issue through discussions. If we decide to stop giving fuel, that will create a massive problem, but if this situation does not get resolved, we will have to take a serious step in the future,” he added. 

Media reported over the weekend that SriLankan Airlines would have to pay Rs. 1 billion by Wednesday or face a suspension of fuel from CPC. CPC is also in a quandary of its own, after the Inland Revenue Department (IRD) froze its bank accounts after CPC failed to pay up the Value Added Tax (VAT) totalling Rs. 1.5 billion for the purchase of petroleum derivatives. The action came with the concurrence of the Treasury, and was temporarily settled with the CPC paying Rs. 500 million.