Tuesday, September 27, 2022
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German expertise suggests PPP model for SL energy sector

Two leading German organizations , in a report , stressed the importance of the Public Private Partnership model in the energy sector and highlighted why the Ceylon Petroleum Corporation (CPC) makes losses despite its competitor LIOC running efficiently.

Friedrich Naumann Foundation for freedom Sri Lanka (FNF) and JAAR Corporate Solutions launched a report on ‘Public Private Partnership ‘ model in the energy sector recently,

“The report highlights the main factors that have contributed to the losses at CPC, proposals for suitable PPP models for potential investors and policy recommendations for the SL Government.

The Ceylon Petroleum Corporation (CPC) has become a heavy burden for the government and the Sri Lankan economy due to its poor performance.

The total debt of the CPC has been increasing at an alarming rate over the last few years. In contrast, Lanka Indian Oil Company (LIOC), which is the only competitor in the retail fuel market in Sri Lanka, has continuously made profit since its incorporation in Sri Lanka.

Two leading German organizations , in a report , stressed the importance of Public Private Partnership model in the energy sector and highlights why the Ceylon Petroleum Corporation (CPC) makes losses despite its competitor LIOC running efficiently.

Friedrich Naumann Foundation for freedom Sri Lanka (FNF) and JAAR Corporate Solutions launched a report on ‘Public Private Partnership ‘ model in the energy sector recently,

“The report highlights the main factors that have contributed to the losses at CPC, proposals for suitable PPP models for potential investors and policy recommendations for the SL Government.

The Ceylon Petroleum Corporation (CPC) has become a heavy burden for the government and the Sri Lankan economy due to its poor performance.

The total debt of the CPC has been increasing at an alarming rate over the last few years. In contrast, Lanka Indian Oil Company (LIOC), which is the only competitor in the retail fuel market in Sri Lanka, has continuously made profit since its incorporation in Sri Lanka,except in some years.

This raises an important question as to why the CPC is not functioning effectively and not making profit while LIOC is making profits.

The answer is directly related to multifaceted inefficiencies in the CPC. Speaking at the event the co-author of the report Dr. Janaka Fernando said “the Sri Lanka economy is facing its worst economic crisis in its post independent era.

In this juncture, PPP is a tool that can help the government of Sri Lanka to manage development projects and other services as off-budget expenses while increasing the efficiency in project delivery and operations.

However, misconception and misinterpretation of PPP models need to be addressed.” This report provides some key policy recommendations for the Government which includes having open discussions with all stakeholders such as government, trade unions and potential investors.

The other issues were sector-related Pppmodels and privatization; evaluate and Reduce Subsidies; Minimize Currency Risks,Increase Liquidity; Introduce a transparent pricing mechanism that covers all costs;.

It is also essential to breaking the monopoly of aviation fuel; and allow for free and fair competition among fuel suppliers while enforcing a transparent anti- trust legislation

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