July 27, Colombo: Sri Lanka's petroleum authority, Ceylon Petroleum Corporation (CPC) Friday lost its appeal against the order given by a UK court to pay nearly US$ 162 million plus interest to the Standard Chartered Bank on the controversial hedging deal.
A government official has told Reuters that the ruling was against Sri Lanka.
"It has been reported that the order is against us," Reuters quoted Attorney General Palitha Fernando.
"First of all we have to see what the order was, then we are looking at (the) possibilities of appealing in the House of Lords," the Attorney General has said.
Petroleum Resources Minister Susil Premajayantha has said that the CPC is in consultation with the Attorney General's department to appeal against the judgment.
The Commercial High Court in London last year ordered the CPC to pay US$ 162 million along with interest to Standard Chartered Bank for non-payment of dues linked to hedging when the oil price hit a record level and then crashed.
The CPC in 2007 entered into a hedging agreement with five local and international banks to buy crude oil at a capped price of $130 per barrel. The deal went sour when the oil prices fell below US$ 50 in the world market and CPC stood to lose nearly US$ 500 million.
Sri Lanka's Supreme Court intervened and in November 2008 the Court ordered the CPC to suspend the controversial hedge payments to banks until a Central Bank probe into the matter is over.
The three foreign banks, CITI Bank, Standard Chartered Bank and Deutsche Bank sought redress with the arbitration panel in Singapore and Commercial High Court in London.
Early last year, efforts by the government at the arbitration panel in Singapore had failed leaving no other option for Sri Lanka but to pay the three banks in full with interest.