- Govt. moots upper and lower price caps at the pump
- Fuel price formula to remain unchanged
The Government is considering issuing an upper and lower retail price cap for fuel at the pump following the entry of three new players to the domestic energy market through the proposed new regulatory body, The Sunday Morning learns.
Officials close to the subject told The Sunday Morning that the Government had first anticipated to introduce an upper price cap with the entry of the three new players – China’s Sinopec, US-based RM Parks Inc. in partnership with Shell, and Australia’s United Petroleum.
Nevertheless, it is learnt that the Government is considering introducing a lower price cap to retail sales, following concerns raised by RM Parks Inc. about competitiveness. The Sunday Morning’s attempts to contact RM Parks-Shell regarding any concerns about competition and profitability failed.
It is learnt that the retail price caps, both upper and lower, are planned to be announced at the beginning of each month by the proposed new regulator for fuel.
The new regulator for fuel is also a part of the ongoing reforms process for State-Owned Enterprises (SOEs), which have been running at a loss.
However, Ministry of Power and Energy Secretary M.P.D.U.K. Mapa Pathirana told The Sunday Morning yesterday (13) that the fuel price formula which was in effect currently would remain unchanged. “The same formula in use will be used by all when the new players enter,” Pathirana stressed.
However, he would not comment on the retail price caps that the Government was considering.
In March, the Cabinet of Ministers approved a strategic move to open up the fuel retail market further, with the three selected companies being granted a 20-year licence.
The Sunday Morning earlier reported plans to provide each new entry with 450 fuel stations held under the Treasury with each getting a block of 150.
The new players will be allowed to store fuel in the storage facilities managed by the Ceylon Petroleum Storage Terminals Ltd. (CPSTL) and may be offered similar terms to those given to Lanka Indian Oil Company (LIOC) for its use.
In March, Ministry Secretary Mapa Pathirana told The Sunday Morning that the CPSTL would charge a fee from the new clients for using its storage facilities.
In October last year, Sri Lanka approved the amending of the Petroleum Products (Special Provisions) Act No.33 of 2002 to liberalise petroleum imports.
Sri Lanka had a duopoly in the petroleum market until March, with the State-owned Ceylon Petroleum Corporation (CPC) and LIOC being the only actors in the retail market.