News

Fuel industry opened to foreign companies

  • Private players permitted if they import using own dollars
  • CPC Unions say move will not resolve shortages
  • Wimal says odds of foreign companies using their own dollars to import fuel low

 

The Cabinet of Ministers this week granted approval for private companies from oil producing countries to enter the Sri Lankan market for the import and retail sale of fuel.

“Cabinet approval was granted to open up the fuel import and retail sales market to companies from oil producing nations. They will be selected on the ability to import fuel and operate without foreign exchange requirements from the Central Bank of Sri Lanka (CBSL) and banks for the first few months of operations,” Minister of Power and Energy Kanchana Wijesekera posted on Twitter yesterday (28). 

However, Wijesekera reiterated that the Ceylon Petroleum Corporation (CPC) will continue to work as the service provider for logistics, stocking, and distribution for a service fee that is to be charged from the said companies. 

“Selected outlets of the existing 1,190 CPC outlets, as well as new outlets, will be made available to the Lanka Indian Oil Corporation (LIOC) and the new companies that are selected. The Sapugaskanda Oil Refinery will be operated by CPC,” he said. 

At a media briefing held on Sunday (26), Wijesekera said that he believed that at least four new players should be allowed to enter the fuel market in Sri Lanka. Explaining further, he said that although they have not had any requests from companies to enter the market as of yet, once the Cabinet paper is approved, the necessary work will be done by the Ministry of Power and Energy to open up the market. 

“It is important to bring in companies who can continuously supply fuel to the market. Here, working with a fuel pricing formula is of utmost importance, as no one would come in if the market does not have a fuel pricing formula,” he added. 

Speaking to The Morning yesterday, Petroleum Trade Union Confederation and CPC Trade Union Convenor Ananda Palitha questioned as to whether LIOC, a private player, has stocks of fuel at the moment, noting that the fuel shortage in the market is due to the foreign exchange shortage in the country, which, he noted, is a problem outside of the control of the CPC and the LIOC. 

“They cannot continuously supply fuel because the Government does not have US dollars (USD). Wijesekera is trying to fool the public. Does he not know that the problem is with the banks and not with the CPC? It was the Government who drained US dollars from the country. That is not the CPC’s fault. These Ministers are trying to bring in private companies, get commissions, and put that money in bank accounts abroad. If there are no US dollars for one private player, the LIOC, to bring in fuel to the market, then how can this country provide for more private companies?” questioned Palitha. 

Meanwhile, addressing a press briefing yesterday National Freedom Front (NFF) Leader Wimal Weerawansa said that increasing the players in the market would not solve the fuel shortage experienced in Sri Lanka.

“According to Minister Kanchana Wijesekera, the decision taken by then-PM Sirimavo Bandaranaike was wrong. He says that if Caltex and other foreign companies were still in Sri Lanka’s fuel import and distribution industry, this crisis would not have existed. However, the cause of the crisis is not that there is a State monopoly for supplying and distributing fuel. If that was the case, at least LIOC filling stations would have sufficient quantities of petrol, but even those filling stations have severe shortages and long queues. Even LIOC imports fuel by opening LCs at Sri Lankan banks and using the dollars available in Sri Lanka. 

“So if even LIOC can’t supply sufficiently, the odds of any new foreign player coming in and using their own country’s dollars to import fuel to Sri Lanka and supply to Sri Lankans, although possible, are low. This is how a crisis is used to achieve goals that would otherwise not be attempted,” he said.

Meanwhile, the Cabinet has also granted approval to fuel bunkers registered with the Sri Lanka Ports Authority (SLPA) to import and sell Jet A-1 aviation fuel necessary for aviation services as the CPC has failed to supply the daily aviation fuel requirement for aircrafts arriving in and departing from Sri Lanka, which amounts to approximately 1.2 million litres per day.