Sri Lanka Marxist party holds Cabinet and government officials responsible for the hedging loss

July 13, Colombo: Sri Lanka Marxist party Janatha Vimukthi Peramuna said today the property of the politicians and the officials responsible for the hedging agreement should be confiscated and auctioned to pay the US$ 162 million the government has to pay to the Standard Charted Bank as ordered by a London court.

Marxist party legislator Anura Kumara Dissanayake said today at a press conference held in Colombo the government could raise the money by auctioning the properties of the Cabinet Ministers, the Central Bank Governor and other officials responsible for the failed hedging deal.

The MP questioned how the Sri Lanka Petroleum Corporation that makes loses of hundreds of millions of rupees annually pay the amount to the Standard Chartered Bank.

A London court Monday ruled that Sri Lanka’s petroleum authority Ceylon Petroleum Corporation (CPC) owes nearly US$ 161.7 million plus interest to Standard Chartered Bank for non-payment of dues resulted from a failed hedging deal. Sri Lanka says it will appeal the court ruling.

Dissanayake said that Central Bank Governor Ajith Nivard Cabraal had pushed for the hedging deal and that the Cabinet, with President Mahinda Rajapaksa’s support had approved the controversial hedging deal.

He said that Central Bank Governor Cabraal had made a presentation at the Cabinet meeting on September 6, 2006 emphasizing the need to strike a hedging deal to purchase fuel from for the country.

The Cabinet had then appointed a committee comprising some Central Bank officials to study this proposal and the hedging deal was finalized following the recommendations made by the committee.

According to Dissanayake, the responsibility therefore lay in the hands of the Cabinet of Ministers and the loss should not be paid with the tax money levied from people.

The CPC in February 2007 entered into a hedging agreement with five local and international banks to buy crude oil at a capped price of $130 per barrel. The deal went sour when the oil prices fell below US$ 50 in the world market and CPC stood to lose nearly US$ 500 million.

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