SC withdraws all orders in oil hedging case

(January 27, Colombo, Sri Lanka Guardian) The Supreme Court on Tuesday vacated (withdrew) all the interim orders issued in the controversial oil hedging cases since the government had failed to comply with earlier court orders.

The interim orders relate to the suspension of Ceylon Petroleum Corporation (CPC) Chairman Asantha de Mel, CPC Deputy General Manager (Finance) Lalith Karunaratne, the CPC foreign exchange payments due to five commercial banks and fuel pricing.

Chief Justice Sarath N Silva ruled that any decision made by the court on a fundamental rights application must be complied with – in terms of the constitution - by the executive and then make any complaints if it cannot implement it .He added that the court has given one month time to the Secretary of the Finance Ministry to show cause as to why it cannot bring down fuel prices to Rs.100 in accordance with the court ruling. But not a single written submission has been filed so far following the court order.

The Chief Justice made these comments when the Deputy Solicitor General Sanjaya Rajaratnam told court that the Executive is considering the Supreme Court order and a fresh fuel pricing formula is to be worked out to bring down the price of petrol. He appealed the court to grant two weeks time for this purpose. The Supreme Court rejected the request and vacated all interim orders issued against the hedging deal

The decision to end the cases will impact on a number of issues including whether Mr De Mel and Mr Karunaratne, who both resigned, will be reinstated as their positions have been temporarily filled. On the issue of the CPC payments to five banks – Standard Chartered, Citi, Commercial, Deutsche and People’s -, the Central Bank has separately launched an investigation under the Monetary Board Act into the hedging contracts, found that the banks had violated rules in these contracts and ordered the five banks not to proceed with the contracts.

Legal sources were however not sure whether the court order will override the Central Bank move. There were three petitions in the case seeking a cancellation of the hedging agreement because it was one-sided and in favour of the banks against the CPC and an order to reduce oil prices. The Central Bank’s order can be challenged in a local court, the sources said. - Sri Lanka Guardian