Nov 02, Colombo: Sri Lanka's petroleum authority, Ceylon Petroleum Corporation (CPC) has lost its US$ 60 million case against Deutsche Bank on the controversial hedging deal.
A U.S.-based arbitrator has ruled that in favor of the bank and the CPC would have to pay US$ 60.3 million plus interest to the Deutsche Bank, Reuters reported.
Attorney General Palitha Fernando has told Reuters that the order is against Sri Lanka and they are now considering what actions to take to annul the order.
Petroleum Resources Minister Susil Premajayantha has told Reuters that he was not aware of the ruling but would appeal if the case went against the CPC.
Deutsche Bank has in March 2009 filed arbitration proceedings against the government of Sri Lanka over non-payment in oil derivatives deals with the CPC.
In July the government 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.
The state-run Ceylon Petroleum Corporation 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.