Oil exploration will benefit the country - Fowzie

Uditha Kumarasinghe, Ranil Wijapala and Irangika Range

Petroleum Resource Development Minister A.H.M. Fowzie yesterday categorically denied the statement made by JVP MP Wimal Weerawansa that Sri Lanka will own only ten per cent of petroleum revenue through the oil exploration in the territorial waters of Sri Lanka.

The Minister making a special statement said prelude to the calling of tenders, the model petroleum resources agreement was prepared by taking into consideration of the domestic tax laws and the internationally accepted norms and related fiscal conditions.

According to the Minister, the bidder should specifically mention in the tender documents regarding the amount to be paid at the signing of agreement (signature bonus) and a production bonus to be paid at the commencement of production.

Based on the assessment of total production, oil companies should pay 10 per cent royalty to the Government.

The Minister said tenderers should include in their tenders that they would provide facilities to Sri Lanka National oil company to collaborate a minimum of 10 per cent investment in oil exploration, development and production activities.

Steps are being taken to set up this National oil company. The profit earned by this company will be fully owned by the Government. The contractor should pay 35 per cent income tax on petroleum profit and 10 per cent dividend remittance tax as per the provisions of Inland Revenue Act. The company which makes best offer will be considered as the successful bidder, he said.

Therefore the statement made by Weerwansa that Sri Lanka will own only 10 per cent of petroleum revenue is entirely based on misconception. All allegations levelled against us by the MP are baseless, false and distorted.

"It is an accepted practice in this industry to conduct road shows in major cities of the world which are famous for this industry. We have not received any financial assistance from any country or institution for this purpose.

"The entire expenses were borne by the Treasury and not by the Americans as stated by MP Weerawansa.

"I totally reject the allegation that the United States of America mad payment of 450 million US Dollars through Fugro Company for conducting road shows in London, Houston and Kaula Lumpur. I also reject the false allegation made by the MP that 200 oil exploration companies have already submitted tenders," he said.

The Minister also rejected the claim that after 10 per cent production share is given to the Government the remaining 90 per cent will be enjoyed by the oil exploring company.

The agreement has incorporated the maximum advantages to Sri Lanka. "I also reject the statement as false that action has been taken treacherously to sell the Sri Lanka Petroleum Resources to America and Western imperialist countries."

He said the petroleum Resources Development Committee (PRDC) established under the Petroleum Resources Development Act No. 26 of 2006 has been progressing successfully.

All important matters related to oil exploration were discussed at the National Economic council meetings chaired by President Mahinda Rajapaksa, the Minister said.

Fowzie said the USA is a friendly country to Sri Lanka. The Government will accept them with gratitude for their assistance given in good faith in various fields including this field too.

"At this moment, I state with responsibility that we have received benevolent assistance from the US Ambassador and the USTDA. I am grateful to US Ambassador. Robert Blake who accepted my invitation and addressed the US investors and told them that there is no threat for investors in Sri Lanka".

The Minister also totally denied the allegation made by Weerawansa who described Director of Petroleum Resource Development Secretariat Dr. Neil de Silva as an Economy killer who came to Sri Lanka to facilitate the companies of the west to loot Sri Lanka's oil resources.