Treasury bails out Srilankan Airlines

Bond of Rs. 25 billion given to CPC as part of loss-making national carrier’s fuel arrears

The Treasury has stepped in to bail out SriLankan Airlines and pay up Rs. 25 billion of the national carrier’s Rs. 36 billion fuel arrears to the Ceylon Petroleum Corporation, a senior CPC official said.

He said a Treasury bond would be given to the CPC -- and this would mean the airline would have to pay the arrears to the Treasury.

Early this year, the national carrier had worked out a deal to buy a fleet of Airbus aircraft costing more than Rs. 315 billon. This included four brand new A 350-900 and six A 330-300 aircraft.

The Treasury’s intervention follows several months of attempts by the CPC to recover the arrears for fuel supplied to SriLankan Airlines and other state institutions.

Civil Aviation Minister Priyankara Jayaratna yesterday confirmed that after several rounds of discussions, the Treasury agreed to pay Rs. 25 billion while the national carri- er would have to pay the balance Rs. 11 billion. However, during 2011/ 12, the national carrier’s losses skyrocketed to Rs. 19.6 billion from Rs. 378 million in the previous year.

Meanwhile, the CPC also has been able to recover Rs. 18 billion as arrears from the Ceylon Electricity Board ( CEB). The CEB paid the arrears by obtain- ing a loan from a state bank. The total arrears of the CEB to the CPC is around Rs. 50 billion.

The Petroleum Ministry has imposed tough conditions on supplies to state institutions. Accordingly, a decision was taken not to supply big consumers in the state sector if they exceeded credit limits.