|
|
 |
 |
| Sunday, 12 September 2004 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
CPC on right track By Hiran H.Senewiratne
Q. What are the power sector reforms that the government is going to implement in the future? A. Power-sector reforms started during the previous regime through the Power Reform Act. It was proposed to unbundle the Ceylon Electricity Board (CEB) into eight public entities based on its restructuring program.Our government having taken over the entity, we had formal discussions with senior managers and trade union leaders on this issue and came to the conclusion not to unbundle the CEB as proposed. We set up a Strategic Management unit within the CEB recently which will be evaluated over a period of one year on its viability. Q. The government removed the petrol subsidy recently. Is the government going to follow the same method with both diesel and kerosine in the future? A With the current economic crisis in the country, the government has managed to the give the subsidy at Rs 3 per litre on petrol. Currently the diesel subsidy is Rs 10 and kerosene Rs 6 per litre.We expect that world oil prices will come down in the future to a manageable level, to give more relief to the public. Q. What is the current situation at the Ceylon Petroleum Corporation (CPC). Will it be privatised thereby allowing a third player to enter the business? A. When I took over the entity in April this year, the CPC held one third of its shares, the Indian Oil Company (IOC) another one third and the balance was with the Treasury.Then Treasury has taken steps to privatise the remaining shares and have called for Tenders. Through the Tender procedure they have shortlisted three companies (Cinopec, Baharatha Petroleum and Hindustani petroleum) during the tenure of the previous government. We did not want to sell the balance of one third of its shares outright. At present the Treasury is having discussions with those short listed companies to go for a joint venture without privatisation. The final decision has not been taken yet. Q. Any conflict of interest between you and the Finance Minister with regard to the CPC issue? A. No, Both Ministries are working on a common plan to put the CPC on the right track since it is public property.Anyway, we are not going to privatise the CPC. Q. The Ceylon Workers Congress (CWC) has not supported the Upper Kotmale project since its inception.Will that be a problem in implementing the project with regard to the current political scenario? A. Now we are discussing implementation of a compromised project with all concerned parties. This project will not have any problem with the CWC. The government is going to re-negotiate with the Japanese Bank for International Corporation (JBIC) to obtain a US $ 270 million fund for the project.This was negotiated five years ago by the then government. Q. The Norrocholai coal power project was temporarily abandoned due to heavy protests from various pressure groups. If the government intends to start this project, how will you tackle these issues? A. Recently, we had a social survey and talked to interested serious parties. As a result, most of the people realised that without starting this project the country cannot reduce the tariff on power and meet the future demand, therefore we want to expedite this project to provide power atleast for another 20 years. The total project is estimated to cost US $ 620 Million. Q. What are the alterative sources of energy that we could tap? A. At the moment we are going for renewable energy. We are also in the process of promoting solar power, danro, windmills and mini hydro power projects. A renewable energy subsidy will also be increased the next budget. Q. Our energy prices are the highest in the region and affects most industrialists in the country.What kind of relief does the government intend to provide for them? A. The reason is that we did not receive rain on time. Therefore the Ceylon Electricity Board (CEB) was compelled to use thermal power by using oil. This got the CEB into heavy debt with increase of oil prices. The only alternative was to expedite the proposed power projects to supply energy at an economic price. There is no short term plan for this issue. Q. What is the current position of the CEB? A. The CEB incurred a loss of Rs 26 billion. At the moment it is in the process of restructuring the short-term debt to long term debt. One of the main problems encountered by the CEB is that they purchase power from private parties at a high rate and sell at a low cost. Q. LP gas prices are expected to touch Rs 1000 by the end of this year.Do you possess any mechanism to control its prices? A. It is too early to comment on this issue. We want to call for tenders for a new player to enter the business after the contract with Laugfs. However, we are going to have an inquiry on Laugfs Gas to verify whether it is to conform to the contract with the, CPC. The contract says: 'Provide gas only for the domestic market'. In some instances it was found that Laugfs sells gas for industrial purposes which is against the contract. Q. How will government cushion the impact of oil prices? A. We buy 71 per cent of crude oil from Iran. Therefore the government had discussions with the Iranian government to supply crude oil on credit, but it has not been finalised yet. Moreover, Minister of Finance Sarath Amunugama along with Jayantha Dhanapala has gone to meet the Organisation of Petrolium Exporting Countries (OPEC) members in Vienna (headquarters of OPEC) to get some relief for the country. Q. What is the current situation of the government's oil exploration program? A. We will be doing the final test in December. This is called the Cyzamic test. Before the end of the next year we could call for international Tenders for oil exploration. The Indian government is also willing to assist us in this excercise. |
|
News | Business | Features
| Editorial | Security Produced by Lake House |
