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CPC’s controversial gas oil deal with UAE firm cancelled

Based on a Cabinet decision, Sri Lanka Ministry of Petroleum Industry Development has decided to reverse a Ceylon Petroleum Corporation (CPC) decision to import 720,000 tonnes of gas oil from UAE-based firm, Al Ain International Petroleum Derivatives Trader LLC, as it had violated tender procedures. A direction has been given for a re-tender as the UAE-based firm which won the tender failed to open the performance bond as per tender requirements, a senior official of the Ministry said. He added that action will be taken to encash the bid bond of US$ 1 million, or the performance bond.

As exclusively reported in the Business Times on September 26, Al-Ain quoted $4 per barrel below the discount price quoted in the Platts Oilgram. At the time market sources were bewildered as to how this was possible. When the subsequent spot tender was closed by the CPC for gas oil on September 21, an award was made at $1.05 per barrel premium.

Market sources said they wanted to know why CPC since of late is registering suppliers who have absolutely no knowledge of the trade and thus suffering the fate of defaults. The question asked by them is who is Al-Ain and how did they get registered as a suppier in the first place. Who are their local agents? Will they be let off the hook by CPC by the non-encashment of the $1 million bid bond, the sources said.
Sourse: http://www.sundaytimes.lk/101017/BusinessTimes/bt06.html

Posted on Monday, October 18, 2010 @ 02:01:37 LKT

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