-By LeN Economic Affairs correspondent
(Lanka-e-News -13.Nov.2025, 11.00 PM) When corruption becomes a culture, it ceases to shock. In Sri Lanka’s energy sector, allegations of gross mismanagement and concealed profiteering have grown so routine that many now take them as part of the national cost of doing business. Yet, as mounting evidence points towards systemic malpractice within the Ministry of Power and Energy and its key state entity, the Ceylon Petroleum Corporation (CPC), the demand for a formal criminal investigation into Former Energy Minister Kanchana Wijesekera is gaining urgency.
At the heart of the allegations lie a series of suspicious procurement decisions, questionable tender awards, and deliberate avoidance of favourable international offers — all of which, critics say, have cost Sri Lanka hundreds of millions of dollars at a time when the country is already staggering under an energy and foreign exchange crisis.
The central question, posed increasingly by industry insiders and opposition lawmakers alike, is both simple and damning: Was this incompetence or corruption?
It is an old truth in public administration that an organisation reflects its leadership. If theft or negligence becomes routine in any tier of an institution, it inevitably implies that those at the top are either complicit or incapable. The Ceylon Petroleum Corporation, once a cornerstone of Sri Lanka’s state enterprise model, now stands as a textbook example.
The CPC’s procurement practices over the past few years have been repeatedly criticised by both local and foreign observers. Instead of securing crude oil from established Tier-One producers — those who extract, refine, and trade directly — the Corporation has consistently chosen to purchase through smaller intermediaries. These middlemen, often little more than speculative trading houses, buy from the same global giants but add layers of markup that drain the national exchequer.
This practice, entrenched under successive governments, raises the inevitable question: why persist with second-tier suppliers when direct access to producers offers far better terms?
Former Officials within the Ministry of Power and Energy, as well as those linked to the CPC, would almost certainly know the answer. But their silence has only deepened suspicion.
Documents reviewed by The Times suggest that Sri Lanka has turned away several credible proposals from major international oil producers that could have dramatically improved national energy security and reduced costs.
One such proposal, originating from a state-owned Middle Eastern oil company with a global trading presence in London, Dubai, and Singapore, offered to supply the entire crude requirement for the Sapugaskanda Refinery on six months’ credit, while also committing to purchase all surplus refined products. The arrangement, according to energy analysts, would have not only stabilised domestic fuel supplies but could have transformed Sri Lanka into a regional petroleum hub — all at zero dollar cost to the Treasury.
The numbers make the missed opportunity glaring. The Sapugaskanda refinery, built in 1969, has a rated capacity of 55,000 barrels per day, yet it typically operates at less than half that due to chronic underinvestment and poor management. The main constraint, officials claim, is limited domestic demand for heavy refined products such as furnace oil and marine fuel. But with a committed foreign partner willing to off-take the excess output, the refinery could have operated at near full capacity, earning valuable foreign exchange and processing margins for the CPC.
Energy economists calculate that such an arrangement could have earned Sri Lanka between 10 to 20 per cent of its GDP in dollar inflows, while eliminating the need for upfront crude payments. The proposal, they say, was “as close to a gift as one could find in the commercial world.” Yet, it was never seriously considered.
The question that follows is inescapable: who stood to benefit from rejecting it?
Comparable economies across Asia — Bangladesh, Malaysia, Vietnam, and even energy-rich Indonesia — have embraced long-term supply partnerships with top-tier state producers, ensuring predictable credit lines and refining cooperation. India, with its own reserves, maintains joint ventures with some of the same firms that approached Sri Lanka.
Sri Lanka’s refusal to do likewise has been interpreted by experts as either wilful blindness or deliberate obstruction to preserve opaque procurement networks.
A closer look at CPC’s past tenders under Former Minister Kanchana Wijesekara illustrates how inefficiency morphs into financial haemorrhage.
In July 2022, the CPC called for bids to supply Jet A-1 aviation fuel. Several suppliers quoted prices as low as USD 13.95 per barrel when market conditions permitted rates near USD 10. Instead, after unexplained delays and shifting technical requirements, the tender was ultimately awarded at USD 21.95 per barrel — a markup of more than 50 percent.
Given an average monthly volume of 40,000 metric tonnes, or roughly 250,000 barrels, analysts estimate that Sri Lanka lost USD 35 million annually on that contract alone.
Documents from the procurement process show that a lower-priced supplier was disqualified on questionable “technical” grounds. Aviation industry experts privately described these objections as “comically spurious.” The episode, they say, reeks of manipulation designed to favour the higher bidder — and by extension, those who profited from the inflated deal.
When asked by critics Minister Wijesekera offered no substantive explanation beyond procedural formalities. The CPC’s internal audit committee has yet to publish its findings.
In June 2022, when Sri Lanka was in the throes of its foreign exchange collapse, the CPC desperately sought suppliers willing to offer crude oil on deferred payment. At least one reputable supplier proposed a six-month credit line, contingent only on a tripartite Non-Resident Rupee Account (NRRA) arrangement with the Bank of Ceylon (BoC).
Under the mechanism, the CPC would pay the BoC in rupees; the bank would then convert the funds into dollars and remit payment to the supplier. But according to correspondence seen by The Times, the BoC inexplicably refused to sign the NRRA with the most favourable supplier — even while approving two other agreements with far less attractive terms.
The bank also declined to provide written justification, nor did it respond to repeated inquiries from the supplier, which, ironically, was already a BoC account holder. This unexplained refusal effectively scuttled the deal, forcing Sri Lanka to rely on higher-cost shipments through secondary traders.
Who made that decision, and on whose instructions, remains unclear.
The pattern that emerges is depressingly familiar: bureaucratic inertia where it serves the public, and extraordinary haste where it serves private pockets.
Sources within the energy ministry, speaking on condition of anonymity, describe a “cartelised environment” where mid-level officials and politically connected agents dominate the tender process. One veteran insider remarked, “If a proposal doesn’t have room for someone’s commission, it doesn’t move.”
The consequence, as ever, is borne by the public — through fuel shortages, inflated prices, and the cascading impact on inflation. Economists note that energy costs now account for an outsized share of Sri Lanka’s Consumer Price Index, with petrol and diesel price fluctuations directly translating into transport and food price volatility.
Then Ministry’s more recent initiative — calling for expressions of interest to build a new refinery complex in Hambantota — appears, on the surface, to represent progress. The proposed site covers 400 acres of Board of Investment (BoI) land, with an option for an additional 190 acres.
However, energy experts warn that without clear oversight, such mega-projects risk replicating the very corruption that crippled Sapugaskanda. Moreover, the Hambantota project could create unnecessary internal competition between two state-run facilities unless integrated under a transparent, technically sound framework.
A senior former CPC engineer told Lanka E News, “Another refinery only makes sense if it’s run with top-tier partners who have the technical and financial strength to operate at scale — not another round of local brokers pretending to be traders.”
Even under conservative assumptions, the economics of proper procurement are compelling.
If crude oil averages USD 100 per barrel, and each refined barrel yields a margin of USD 30–35 through derivative products, then refining 55,000 barrels per day should generate a gross margin of at least USD 7–10 per barrel, or roughly USD 153 million annually. A second refinery of equivalent capacity could double that figure.
Instead, CPC’s mismanagement has left the refinery underutilised and the country perpetually short of dollars — a paradox of inefficiency in an industry that could otherwise be a net earner.
Former Minister Wijesekera, once seen as a reformist technocrat, now faces allegations that under his watch the CPC has perpetuated the same opaque practices that defined its past.
His defenders claim he inherited a dysfunctional bureaucracy; his critics argue he has become its willing custodian. Either way, accountability, they say, stops at his desk.
Political observers note that the President Ranil and , too, cannot escape scrutiny. As the appointing authority and head of government, he bears constitutional responsibility for ensuring probity in ministerial conduct. “If corruption persists unchecked, it is no longer the act of individuals — it becomes an act of the state,” a senior legal academic at the University of Colombo observed.
Public ethics scholars have long argued that in governance, incompetence and corruption are twin faces of the same coin. According to Carlson M.M. et al. (2018), “corruption signifies a failure to conform to standard; an inducement to wrong by improper means; or a departure from what is pure or correct.”
By that measure, negligence in overseeing billion-dollar transactions, or knowingly turning away credit arrangements that could save public funds, qualifies as institutional corruption, even absent direct bribery.
Sri Lanka’s state-owned enterprises, from the CPC to the Ceylon Electricity Board (CEB), have long been associated with losses and inefficiency — conditions often used to justify privatisation. Yet experts argue that public ownership is not the problem; governance is. “State entities can make profits if they follow market rules and eliminate political interference,” said one former Treasury official. “What we have instead is a culture of rent-seeking.”
The growing call for a criminal investigation into Former Minister Wijesekera and key CPC and BoC officials is now being echoed NPP political lines. Government MPs are expected to submit a formal request to the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), citing documentary evidence of manipulated tenders and unexplained rejections of favourable offers.
Civil society groups are also preparing petitions demanding an independent forensic audit of CPC procurement records dating back to 2021.
Should such an inquiry materialise, it could become one of the largest corruption probes in Sri Lankan energy history.
The chain of responsibility in public institutions is simple: rot travels downward. If there is corruption or incompetence at any level, it is because those at the top have allowed it, encouraged it, or failed to stop it.
The CPC’s then state is not an accident of market forces or global volatility. It is the predictable outcome of poor leadership, opaque dealings, and a political class that has long mistaken public office for private gain.
Whether Former Minister Kanchana Wijesekera is a passive bystander or an active participant remains to be proven. What is already certain is that Sri Lanka cannot afford another energy crisis born of its own corruption. The country needs accountability, not excuses — and that begins with the man in charge.
-By LeN Economic Affairs correspondent
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by (2025-11-13 18:37:48)
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