Nov 04, Colombo: Sri Lanka will appeal against the ruling by a U.S. - based arbitrator in favor of the Germany's Deutsche Bank to pay US$ 60 million to the bank on the controversial hedging deal.
Petroleum Resources Minister Susil Premajayantha has said Saturday that necessary measures have been taken through the Attorney General's Department to challenge the ruling.
Legal action is being drafted by the Department to annul the ruling, the Minister has added.
Under the ruling Sri Lanka's petroleum authority, Ceylon Petroleum Corporation (CPC) would have to pay US$ 60.3 million plus interest and legal costs to the Deutsche Bank.
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.
Recalling the dismissal of the claim by Citi Bank on the hedging agreement, the Minister has stressed that there was no need to make immediate payments.
In August last year a Singapore-based international arbitrator dismissed a Citi Bank claim against the CPC to pay US$ 192 million plus interest in payments over the breached hedging agreement.
However, in July this year 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 CPC 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.