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Fuel crisis: LIOC to get more sheds?

10 Jul 2022

  • Additional 50-60 fuel sheds to ease shortage
  • Sri Lanka reaches out to Malaysia for fuel 
By Maheesha Mudugamuwa Lanka Indian Oil Company (LIOC), a subsidiary of Indian Oil Corporation (IOC), which is under the ownership of the Ministry of Petroleum and Natural Gas of the Government of India, is likely to receive another 50 fuel stations countrywide which are currently under the Ceylon Petroleum Corporation (CPC). The Sunday Morning reliably learns that a formal letter requesting the allocation of around 50 to 60 fuel stations covering the entire country has now been forwarded to the Ministry of Power and Energy by the Lanka IOC management in Sri Lanka. The request was confirmed by LIOC officials. The move has come after CPC’s restriction imposed on issuance of fuel for private vehicles due to the extreme shortage of fuel stocks in the country and also after having confirmed shipments due to arrive in Sri Lanka in the near future. Since the end of last month, the CPC has limited the issuance of fuel as it decided that fuel would be dispensed only to vehicles attached to essential services. Accordingly, diesel and petrol were issued only to essential services such as ports, health sector, essential food items distribution services, and for transportation of agricultural products. Initially, as per the Cabinet decision, the supply was to be limited only to essential services till today (10), in expectation of a continuous supply from hereon. However, as of last week, there was no exact date as to when the country would receive fuel shipments. Furthermore, the statements made by several key authorities too contradicted each other. Earlier, the Cabinet was confident that the fuel situation would be normalised from today. LIOC fuel distribution  In such a backdrop, LIOC commenced distribution of fuel to private vehicles from its outlets around the country. To expedite the service to the public, it has requested the Government to expand the number of fuel outlets by another 50 or so fuel stations. LIOC is the only private oil company that operates retail petrol/diesel stations in Sri Lanka. It was incorporated in 2003 to carry out retail marketing of petroleum products and bulk supply to industrial consumers with 100 CPC-owned petrol/diesel stations. At present, LIOC operates 202 petrol and diesel stations in Sri Lanka and has a very efficient lubricant marketing network with 235 SERVO shops and 24 lubricant distributors. LIOC’s other major facilities include an oil terminal at Trincomalee – Sri Lanka’s largest natural harbour, a lubricant blending plant with a capacity of 18,000 tonnes per annum, and a state-of-the-art fuel and lubricant testing laboratory in Trincomalee. LIOC also owns a one-third share in Ceylon Petroleum Storage Terminals Limited (CPSTL) – a Joint Venture of Lanka IOC and CPC – which operates 13 oil terminals across the island. When contacted by The Sunday Morning, Lanka IOC Managing Director (MD) Manoj Gupta said LIOC had formally requested the Ministry of Energy to give it around another 50 to 60 outlets to distribute fuel to the public. “We are waiting for a response from the Ministry,” Gupta said, adding that the company expected to receive a favourable response from the Ministry soon. Commenting on fuel distribution, the Lanka IOC MD noted that the company was currently managing the demand requirements. “We have applied for some new locations and subsequent to receiving approval, we will advertise the new locations. We are trying our level best and we are also having longer operating hours at the Trincomalee terminal. This has been going on for the last four days. Not only are we releasing 7,500 MT to CPC on a continuous basis, we are also maximising the supply of petrol and diesel from Trincomalee to all sheds,” Gupta said. LIOC has a retail market share of approximately 11% in the auto fuel market in Sri Lanka, with a 10.4% market share in petrol and 11.2% market share in diesel retail sales. TU allegations Meanwhile, trade unions attached to the petroleum sector are alleging that LIOC has gained huge profits out of its fuel distribution compared to CPC. They stressed that LIOC should supply fuel to CPC in case of an emergency. The unions also alleged that LIOC was selling fuel at higher rates. Speaking to The Sunday Morning, Energy Trade Union (ETU) Convener Ananda Palitha argued that LIOC should sell fuel at lower prices than supplied by CPC as its operational cost was at a very low level compared to CPC. As per LIOC’s Annual Report for 2020/’21, the company’s finance income stood at Rs. 942 million during the year – an increase of 119% [2018-’19: Rs. 430 million], with investment composition in both local and foreign currency. The company has invested surplus funds in high-yielding products, including first-time investment through portfolio management services. However, due to the sharp depreciation of Sri Lankan currency against the US Dollar during the last quarter of the year, the company suffered an exchange fluctuation loss of Rs. 478 million on account of the unhedged portion of USD-denominated import loans. This loss was, however, lower in comparison to the loss of Rs. 745 million the previous year.  The Sri Lankan Rupee depreciated by 8% during the year from Rs. 175.31 per US Dollar at the beginning to Rs. 189.73 per US Dollar at the end of the year, it stated. On Friday (8), LIOC moved to suspend all retail fuel sales at the pump due to the protest campaign planned for yesterday (9) in Colombo and other areas. Issuing press releases, LIOC said that its fuel distribution to CPC and local industry from the storage terminal run by it in Trincomalee would continue. “Hope to resume supplies to sheds from Sunday (10) early hours,” LIOC noted. Minister’s timeline Last week, following his recent visit to Qatar in a desperate search for possibilities of bringing down a fuel shipment, Power and Energy Minister Kanchana Wijesekera said a ship carrying 40,000 MT of diesel would arrive in Sri Lanka on 8 or 9 July and CEYPETCO would be able to distribute fuel from today (10). According to the Minister, arrivals of a diesel ship from Coral on 8 or 9 July, a diesel ship from Vitol between 11 and 14 July, and a petrol ship from IOC on 22 or 23 July have been confirmed. Crude oil shipments from Coral on 15 July and 12 August have also been confirmed. Arrivals of a petrol ship from Malaysia on 10 or 11 July and a diesel ship from IOC between 15 and 17 July upon advance payment are yet to be confirmed. He also noted that $ 19.5 million had been settled for the petrol ship and another $ 19.5 million had to be settled by Friday (8). He said the remaining amount of $ 20 million to be paid for the ship would be settled from the remainder of the Indian Line of Credit. In the meantime, a request has been made from the Malaysian Government to obtain fuel supplies. The Malaysian Government has approved the provision of 50,000 MT of petrol and 10,000 MT of kerosene and informed that necessary steps would be taken to provide the fuel as soon as possible, the Minister said. Updating on the amount of fuel available in the country, the Minister said approximately 12,774 MT of diesel, 1,414 MT of 92 octane petrol, 2,647 MT of 95 octane petrol, 233 MT of super diesel, 500 MT of aviation fuel, and 29,000 MT of furnace oil were in stock at present. Nevertheless, as of Friday (8) Sri Lanka had not received any fuel shipment, nor were there any indications that any shipments would arrive, in line with the Minister’s statements. Meanwhile, in a contradictory statement, Chief of Staff of the Prime Minister’s Office Sagala Ratnayaka said CPC would not be able to source a petrol shipment until 22 July. He said that 38,000 MT of diesel would be received between the 11 and 15 July. Jet fuel: ‘We have stocks’: AASL; ‘No stocks’: CPC Concerns have been raised over the availability of jet fuel in the country. When The Sunday Morning contacted Airport and Aviation Services (Sri Lanka) (Pvt) Limited (AASL) Chairman Maj. Gen. G.A. Chandrasiri, he said the country had sufficient stocks of jet fuel until the next shipment arrived. He added that they believed the next shipment would arrive soon. In the meantime, a senior CPC official who wished to remain anonymous told The Sunday Morning that CPC had already handed over the stocks of jet fuel to the Civil Aviation Authority (CAA) and it had no stocks available at present.   As reported, the CAA on 28 June issued a notice advising airlines to carry fuel for their return journeys as the CPC had failed to import the required jet fuel into the country due to the foreign exchange crisis. It was further reported that the Bandaranaike International Airport (BIA) could only secure a supply of 66,000 gallons of jet fuel per day, despite having the capacity for two million gallons. The CAA has mandated that any flight entering the country must carry the fuel for its return trip.  


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