2007 - Ceylon Petroleum Corporation

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In total, debts from the State sector rose
by Rs. 10.9 Bn during the financial year.
We maintain constant dialogue with the
Treasury over this issue; the Treasury
has promised that outstanding from the
Armed Forces and Sri Lanka Railways will
not be allowed to increase before the
end of 2008 and that remittances from
CEB will improve significantly as a result
of recent tariff increases.
More recently, enhanced diplomatic
relations with the Government of Iran
also helped improve CPC’s liquidity
position, when the government of that
country extended supplier credit on
crude oil by another 90 days. This facility
improved our liquidity position by
US$ 450 Mn.
Risk Management
CPC currently purchases between
US$ 150 Mn and US$ 200 Mn monthly,
mainly from the two State banks.
Proceeds from sales are mainly in Rupees,
a fact that exposes the Corporation to
foreign-currency risk. CPC’s strategy is
to convert the greatest possible sum of
Rupees into Dollars daily in consultation
with the Central Bank and the Treasury.
In this operation, CPC acts under a
double responsibility, supporting the
Central Bank while using the flexibility of
CPC’s Dollar requirements to manage the
exchange rate.
We track opportunities for Rupee/
Dollar swaps, which have recently
been authorised by the Central Bank.
However, this market is not large
enough to meet our requirements.
ANNUAL REPORT 2007 | CEYLON PETROLEUM CORPORATION