2007 - Ceylon Petroleum Corporation

Report of the Auditor General
55
Auditor General’s Comments
(d) The Corporation had incurred a loss of Rs. 132 Mn during the year under
review (previous year loss was Rs. 243 Mn) by downgrading of 21,198,416
litres of Aviation Turbine Fuel to Lanka Kerosene as the average price
difference between the two products was Rs. 6.24 per litre.
Chairman’s Observations
In this regard, the Chairman stated as follows:
“For transfer of kerosene as well as the aviation fuel, the Corporation
used a common pipeline. It is an industry practice to flush the pipeline
before transferring Aviation Turbine Fuel and to downgrade the certain
quantity of aviation fuel to kerosene. All cost has been accounted when
the Corporation achieved the annual profit of Rs. 2.8 for the year 2007.”
However, it was proved that the above mentioned loss was not because of
the reason mentioned by the Chairman of the Corporation but because of
poor stock control.
(e)
The Corporation had sold Liquid Petroleum Gas (LPG) to a private company
at FOB price per Metric Ton (MT) according to Saudi Aramco Fuel Prices
which in certain instances had not only been lesser than the Refinery gate
price but it had been lesser than the Crude price per MT as well. Nevertheless,
the Corporation had incurred a gross loss of Rs. 28 Mn and Rs. 24 Mn from
LPG sales during the year under review and previous year respectively
because sales value was lesser than its cost of sales.
In this regard, the Chairman stated:
“That the above mentioned arrangement had been agreed in line with
Treasury directives.”
(f)
Fuel supply quantity of LFO 1500 Cst., LFO 3500 Cst., LAD and Naphtha
of the year under review had sharply increased by 100%, 9%, 102% and
63% respectively as compared with the previous year quantity of
188 Mn litres of LFO 3500 Cst., 114 Mn litres of LAD and 87 Mn litres of
Naphtha. Since the Corporation had sold those products to CEB at very
concessionary prices without profit margins and interest for capital tied
up due to non-settling the long outstanding, the Corporation had not
received any benefit from those transactions.
ANNUAL REPORT 2007 | CEYLON PETROLEUM CORPORATION