Massive Financial Fraud at CEYPETCO exposed stressing for urgent reforms
August 31, Colombo (LNW): In a shocking revelation, Presidential candidate and former Public Utilities Commission of Sri Lanka (PUCSL) Chairman, Janaka Ratnayake, has exposed a major financial scandal involving the Ceylon Petroleum Corporation (CEYPETCO).
He claims this is the largest case of fraud and corruption ever reported by the Auditor General.Speaking at a media briefing, Ratnayake disclosed a massive Rs. 36 billion fraud related to the importation of fuel oils by CEYPETCO, revealed during a Committee on Public Enterprises (COPE) meeting.
He alleged that the mismanagement and corruption have led to inflated fuel prices, suggesting that the public could see a reduction of Rs. 200 per litre if proper practices were followed.
Following his allegations, the COPE instructed the Auditor General to conduct a comprehensive investigation.
The findings have reportedly uncovered severe mismanagement and financial irregularities involving high-ranking government officials and politicians.
Those implicated include Power and Energy Minister Kanchana Wijesekera, former State Minister of Power and Energy D.V. Chanaka, and CEYPETCO Chairman Mohomad Uvais, among others.
The Auditor General’s report highlighted several key issues:
Fuel Oil Procurement Missteps: CEYPETCO’s errors in fuel oil procurement, including incorrect pricing and failure to secure long-term contracts, resulted in a Rs. 36.5 billion loss. The urgency in procuring fuel oil was also questioned, with delayed vessel arrivals adding an extra Rs. 355 million to costs.
Emergency Procurement and Demurrage Costs: CEYPETCO’s failure to assess financial viability during emergency procurement led to Rs. 336 million in additional demurrage costs, highlighting poor strategic planning and oversight.
Bid Management and Tender Irregularities: The report pointed out significant lapses in bidding procedures, with bids rejected for non-compliance later recalled and awarded at a higher price, indicating tender irregularities.
Diesel Procurement Mismanagement: CEYPETCO canceled a favorable term contract for Diesel and instead procured from the same supplier at an inflated price, causing a Rs. 3.5 billion loss. Additional purchases from other suppliers further increased losses by Rs. 3.4 billion.
Misapplication of Pricing Models: The use of incorrect pricing models, including the misapplication of the PLATTS pricing index, led to substantial losses. A high price index was wrongly applied for crude oil procurement, resulting in a Rs. 17.9 billion loss.
Skyrocketing Demurrage Costs: Demurrage costs increased dramatically to Rs. 5.5 billion, a ninefold rise from the previous year, due to inefficiencies in logistics and supply chain management.
Inequitable Fuel Distribution: The report revealed severe inequalities in fuel distribution, with a small number of dealers receiving disproportionately large allocations during the crisis, leading to public unrest and long queues at fuel stations.
Ratnayake emphasized the urgent need for reforms within CEYPETCO to prevent further financial losses and restore public trust.
He stressed the importance of transparency, proper procurement procedures, and improved oversight to ensure efficient operations.
As the nation grapples with the consequences of these revelations, there is increasing pressure on CEYPETCO and the authorities to act swiftly, hold those responsible accountable, and prevent future failures.
