CPC management needs complete overhaul - Minister Susil Premajayantha

By L.S. Ananda KANNANGARA

Inefficiency in management is the main cause for the bankruptcy of most of the State enterprises, said Petroleum Industries Minister and United People's Freedom Alliance (UPFA) General Secretary Susil Premajayantha.

In his interview with the Sunday Observer Minister Premajayantha referring to the present crisis of the Ceylon Petroleum Corporation said that the Corporation has sought financial assistance from the Treasury to tide over the difficulties. Excerpts of the interview:

Q: The rumour is that the government will soon increase the prices of petrol and other petroleum products. Your comments.

A: The world market prices of crude oil and refined oil have increased by 20 percent during the past six months.

A barrel of refined oil increased from US$ 100-105 to US$ 125-130 and a barrel of crude oil from US$ 80-85 to US$ 100-112 during the past six months. Escalation of prices were due to the prevailing political instability in the Middle East and the war in Libya.

A CPC petrol bowser

A filling station

Q: The Opposition alleges that the government has imposed heavy taxes on petrol, diesel and kerosene which has resulted in price escalation.

A: No, it is not factually correct. No taxes have been imposed on kerosene at all. Long ago a Rs. 25 tax per petrol litre and Rs. 2.50 per kerosene litre were imposed by the government. The present government did not impose taxes on petroleum products as alleged very often by UNP MP Ravi Karunanayake.

Q: Is it true that the Ceylon petroleum Corporation incurs heavy losses daily?

A: The CPC loses Rs. 2, Rs. 41 and Rs. 33 on each litre of petrol, kerosene and diesel. The CPC losses are estimated at Rs. 12,320 million in 2009 and Rs. 26,920 million in 2010.

Q: What steps have been taken to arrest this situation.

A: In the business world the farsighted entrepreneurs introduce new strategies for speedy recovery from economic woes. The CPC was advised to go back to its earlier business such as bunkering, lubricants and tar business. The Board of Directors is empowered to do profitable businesses in the petroleum field under the CPC Act of 1961. There have been no objection to implement or re launch the above mentioned businesses which are being handled by the private sector viability at present but the CPC has not launched any such ventures, due to reasons not known. On the other hand, the key positions such as Chief Executive Officer (CEO) or General Manager, Financial Controller have fallen vacant while arrangements have been made to cover the duties of Marketing Manager, Legal Manager, Commercial Manager and the Treasurer.

Q: Is it not the responsibility of the Ministry to streamline the management of the Corporation. Should not all those responsible for these lapses on their part be dealt with and put the corporation back on track?

A: Nothing positive has happened despite Ministry directives. I strongly feel that the CPC needs a restructuring soon to overcome this rapidly deteriorating situation. The present organisational structure needs to be overhauled; marketing should be the first priority of a trading organisation. This is immensely true of the CPC. All vacancies, especially the key positions should be filled by competent people.

Q: Recent newspaper reports had brought to light 23 government institutions and corporations including the CPC which have failed in their business. The treasury has to bear the brunt of the monthly salaries of their staff. As an MBA holder and also one who is conducting research for his PHD in Management, what is your opinion about this situation?

A: Most of these bankrupt government ventures earned profits under efficient managements. Even the CPC had earned Rs. 3,800 million profit in 2005, when I was the Minister of Power and Energy. There is no alternative but to appoint competent people with a flair for management for responsible posts.

Q: The wrong political decisions could be attributed to the present predicament of the CPC. The Ceylon Petroleum Storage Terminal Pvt Ltd. (CPSTL) is a separate organisation which runs the Kolonnawa Oil Storage, would you like to explain its present role?

A: When CPC was privatised in 2002 the then UNP government set up the CPSTL which mainly depends on CPC and SLIOC's servicing charges. Since the SLIOC imports oil from India via Trincomalee the CPSTL lost its income and now it depends heavily on CPC's servicing charges.

Under the provisions of the Act by which the CPSTL was setup its activities cannot be audited by the Auditor General.

This special provision should be removed from the Act.

There should not be exception to the rule that the accounts of all State Corporations ought to be audited by the government Auditor. No transparency could be guaranteed at all under the present setup.

I am totally dissatisfied with the manner which the CPC and CPSTL are presently managed. These ventures should be restructured to make them commercially viable .