• CPSTL: CPC two-thirds, LIOC one-third
• Shared among CPC, LIOC, Sinopec, RM Parks/Shell, United Petroleum

With the introduction of three new players into Sri Lanka’s petroleum industry, Ceylon Petroleum Corporation (CPC) Chairman Saliya Wickramasuriya yesterday (1) said that Ceylon Petroleum Storage Terminals Ltd. (CPSTL) agreements allowed product sharing to ensure supply continuity to consumers.

He added that any licensee borrowing products from another would be required to settle the transaction in foreign currency, rather than Sri Lankan Rupees (LKR).

United Petroleum of Australia will begin distributing fuel locally next month, with 150 filling stations allocated to it by the Ministry of Power and Energy. Shell/RM Parks has also entered the market, planning to serve the entire island through 92 filling stations. Sinopec commenced operations last year.

Elaborating on the CPSTL’s preparedness to cater to the requirement, Wickramasuriya told The Sunday Morning that the CPSTL had commenced a programme of ramping up and modernising its infrastructure to meet the growing demand.

He said that the new programme included a completely revamped corporate strategic plan, introducing competitive remuneration and a performance-based promotion and bonus structure, and a completely automated and interconnected islandwide petroleum inventory and supply management system.

The CPSTL is a limited liability company, owned by the CPC (two-thirds) and Lanka IOC (LIOC) (one-third), delivering storage and distribution services for all licensed retailers who have signed service agreements with it.

These include the CPC, LIOC, Sinopec, RM Parks/Shell, and United Petroleum.

In addition, two companies are licensed to import, store, distribute, and sell JetA1, issued with a view to lowering aviation fuel prices through competition.

“Of all these licensees, only LIOC has storage facilities (in the Lower Tank Farm, Trincomalee, and in partnership with CPC via Trinco Petroleum Terminal Ltd.), although some customers have their own bowsers. All other existing terminals, regional storage depots, and pipelines are owned by either the CPC or CPSTL, although the Government is encouraging private investment  in selected locations islandwide,” Wickramasuriya said.

He went on to explain that the CPSTL business model would provide services for a fee, called a throughput charge, which would vary from product to product and be applied per litre and in line with the handling infrastructure used. 

“This rate is revised periodically and applies to all customers equally, although there may be different minimum volumes stipulated depending on market share. The CPSTL does not import, export, or sell any products, which is the business of its customers. Therefore it is entirely up to them to ensure that the volumes required to meet their own forecast demand are imported in time for storage and distribution. However, with none of the licensees having thus far invested in infrastructure other than the CPC and LIOC, the CPSTL still needs to cater to everyone’s requirements,” he stressed.  

The CPC conducts weekly Stock Review Committee (SRC) meetings, to which all active licensees are invited, and has the responsibility of scheduling time and quantity of products being imported, synchronising this with projected demand and available storage. 

However, the responsibility of ordering and delivering products as planned by the SRC rested entirely with the licensees, the CPC Chairman noted.  

“The CPC is flexible where possible, but the premise of introducing competition into the retail sector is that licensees are commercially and operationally able to deliver. The CPC will continue to provide as much overhang as possible, but dropping market share and limited storage requires licensees and suppliers to meet their commitments. For example, the upcoming planned refinery shutdown commencing on 7 July and lasting for 42 days has been communicated clearly to all licence holders at the beginning of 2024,” he said.