Petroleum industry development on a new plane:

Oiling the wheels of development

A complete overhaul of the institutions coming under the Petroleum Industires Ministry’s purview is necessary to earn profits, Petroleum Industries Minister Susil Premajayantha says. Following are the excerpts of the interview by Nadira Gunatilleke of the Daily News

Q: What are the burning issues in this field at the moment ?

A: There are three main issues. They are dues, management issues and discipline problems. We supply oil to the Ceylon Electricity Board, other power generating companies and State institutions. But we do not get paid on time for the oil we supply. There are dues. Because of this we have to borrow money from banks. This is one of the burning issues, at the moment. First of all we have to discipline these institutions. There are certain management issues too. The previous management had mixed up priorities and spent borrowed money on large projects. It lacks financial management.

Q: What are the solutions for these problems ?

A: First of all we have to recover all dues. Then we have to discipline the State institutions and solve all management issues. Only then can we make profits from the organizations. At the moment we do not make any profits.

Q: Describe your future plans for this Ministry.

A: I have already called for financial reports as at March 31. I will have an audit to that date. Only then will I understand where I stand. Only after doing this can I tell the public clearly that this is where I took off. I will prepare a recovery plan for the next six months. Then I will have ‘review meetings’ every week with the top management and Chairmen of the organisations. I will make arrangements to train our cadres at the Head Office and worksites. This is the first time we have a Petroleum Industries Ministry. Earlier it was under the purview of Power and Energy Ministry. Now it is in the right place because other countries have Petroleum Industries Ministry. Ceylon Petroleum Corporation (CPC) and Ceylon Petroleum Storage Terminals Limited (CPSTL) and oil exploration come under this Ministry’s purview. CPC is responsible for import of petroleum and distribution.

Q: Is there any specific area that should be given priority ?

A: Yes, from the day one I advised the Ministry Secretary to stop all purchasing except commodities and stop all recruitments. I have to get the report on that to take a decision. After studying the present situation carefully for a couple of weeks I am going to hold a press briefing to announce where I stand at the moment, and the future plans. Petroleum is very important for development. Petroleum industries is one of the key areas when it comes to achieving the targets set by Mahinda Chinthana – Vision for the future.

Q: This is a new subject. How you are going to face this new challenge ?

A: This is not a new subject for me. I held the post of Power and Energy Minister for one and half years from April 2004 to November 2005. By the time of my departure from the Ministry it earned a Rs 3,000 million annual profit. During that time there were various issues such as employees’ problems, management difficulties and there was a move to sell one third of petroleum to a third player but I successfully handled all those issues.

Q: What are the challenges you face when it comes to oil exploration in Sri Lanka ?

A: Oil exploration is a topic that almost all Sri Lankans are interested in. It is not something simple. It is a very complicated process that should be handled carefully. The best example is Gulf of Mexico oil spill.

It shows how complicated this task is. According to the present timetable the agency assigned for oil exploration will commence drilling around 5,000 metres in the sea in the Mannar basin by next May (2011). Everything will be done according to International standards.

Q: How about Hedging ?

A: Hedging is a subject that should be discussed at length. The CPC was not the only company that used the hedging concept. Many other organizations including those in foreign countries use this concept. The problem is selecting the correct instrument. If you are going for hedging for the first time, you should have experts in the specific area. What you should do is hiring a company that is very familiar with hedging.