• Singapore-based supplier invokes force majeure over disrupted maritime routes
• CPC renegotiates delivery timelines to avoid legal fallout

The Ceylon Petroleum Corporation (CPC) has deferred four diesel cargoes scheduled for March under tender DK/14/2026 following delivery failures by a Singapore-based supplier, which cited global supply chain disruptions.

The supplier had formally notified the CPC of its inability to honour the agreed delivery schedule, invoking force majeure provisions and pointing to instability in key transit hubs, including Khor Fakkan Port. 

Despite these claims, however, the CPC stated that it did not accept the force majeure position outright, opting instead to renegotiate delivery timelines to preserve contractual continuity. 

Speaking to The Sunday Morning, CPC Managing Director Dr. Mayura Neththikumarage outlined the legal and operational constraints underpinning this decision.

“We never accepted any force majeure claims. A few suppliers cited force majeure, but we informed them that we could not accept it. Consequently, they requested a deferred timeline. No shipments were cancelled, but there were minor deferments. If we had rejected the deferred timeline, force majeure would have legally applied,” Dr. Neththikumarage said. 

“Internationally, the ongoing war is a recognised fact. If locations like Khor Fakkan are attacked, force majeure is undeniably applicable under frameworks such as the Hague-Visby Rules. We would not be able to contest that in international arbitration. Therefore, our legally valid mechanism was to instruct them to deliver the shipments once Khor Fakkan becomes accessible,” he added.

According to him, under tender DK/14/2026, pricing is not fixed at contract execution but is instead determined at the point of delivery, based on a five-day averaging mechanism linked to international benchmark indices. This exposes procurement costs to volatility in global oil markets, particularly during periods of geopolitical instability. 

Dr. Neththikumarage explained that during the peak of recent conflicts, global premiums on refined petroleum products surged sharply before moderating. The CPC relies on the Platts Index for diesel procurement, ensuring alignment with internationally published price assessments. 

“At the time of the war, there was a considerably higher price, but it has since come down. For example, the global premium had previously gone up to between $ 50–60 per barrel, but it has now dropped. For the diesel shipments, there is a specific Platts Index. The index had reached $ 291.82, but we managed to secure deals between $ 281–288 when the prevailing world price was $ 290. Both parties have no control over the index price, as it is a published standard,” he said.

“Diesel prices have experienced a decline recently. Under normal circumstances, we receive 35,000–37,000 MT per vessel. The finalised domestic cost depends entirely on the arrival date, which is calculated using a five-day average. In early April, the landed cost was nearing Rs. 300 per litre, but it later dropped below Rs. 200. We are unable to cancel shipments based on force majeure claims, but we have the authority to alter the delivery dates to navigate the inconsistencies of the global supply chain,” he added.

Despite the deferment of the four March shipments, the CPC official maintained that national diesel supply remained stable, with sufficient inventory to meet current demand. Consumption patterns have eased following the conclusion of the Sinhala and Tamil New Year period, which typically sees elevated industrial and transport activity. 

“There is absolutely no shortage of diesel in the country at present. The national requirement was relatively high prior to the New Year period, but demand has since decreased because many industries ceased operations last week. Furthermore, if the country receives adequate rainfall, the demand for thermal power generation will decrease even further. Our supply management relies on agile planning. While it is impossible to predict the exact developments of a global war, we have ensured that our fuel supply remains firmly under control until at least September.”