Petroleum Development Act in effect by October

  • Act to establish Petroleum Resources Development Authority 
  • Authority to attract foreign expertise/investment to petroleum sector
  • Extraction of newly found oil, gas deposit the objective


By Imsha Iqbal

The new Petroleum Development Authority Act (PDA) that contains legal provisions regarding petroleum and natural gas exploration is expected to come into effect in October 2021, The Morning Business learns. 

Speaking to us, Ministry of Energy Secretary K.D.R. Olga stated that the effective date will be decided following Parliamentary approval of the relevant Bill within a few months time, and thus expects the Act to come into effect by October.

She explained that the Petroleum Resources Bill would specify some of the legal provisions regarding oil and gas exploration and production industries, as well as establishing provisions to ensure the security of investors in this field.

The investment provisions are to be included as the Ministry of Energy expects this sector to attract vast investment due to the potential in the country’s energy sector, but it was observed that existing provisions in the Act are not robust enough in attracting foreign investors.

When it comes to institutional provisions in said Bill, Secretary Olga highlighted that the Petroleum Development Secretariat does not function in terms of a proper institute. Therefore, the Ministry of Energy anticipates establishing an apex body on the matter of hydrocarbon resources, dubbed the Petroleum Resources Development Authority (PRDA), and appointing a board under the mentioned authority.

On an earlier occasion, the Minister of Energy Udaya Gammanpila told The Morning Business that the hydrocarbon resources identified in Sri Lanka are anticipated to be extracted following the establishment of the PRDA. 

Further, the Ministry looks forward to excavating and extracting the hydrocarbon deposits discovered within the Mannar Basin, and has decided that the process should be performed through investors selected by auction.

Under this mechanism, the Sri Lankan Government will not have to undertake the ordeal of extracting the aforementioned resources, but at the same time, would be able to benefit from the royalty and profit share, Gammanpila said.

Thus, the existence of the new Act is expected to greatly benefit the country in terms of generating capital domestically.

Cabinet granted approval to the proposal presented by Minister Gammanpila to publish the aforesaid Bill on the government gazette after it was granted clearance by the Attorney General (AG). 

This novel PDA comes following the cancellation of the Petroleum Resources Act No. 26 of 2003, and Cabinet approval for the cancellation of the previous Act was granted on 25 January this year. 

Cairn Lanka (Pvt.) Ltd. (CLPL) commenced exploration of drilling activities in Sri Lanka during 2011, which marked the first hydrocarbon discovery in Sri Lanka. Thus, the establishment of the new Act is expected to create a domestic petroleum industry that generates enough revenue to pay off national debts, according to Gammanpila.


Petroleum Development Act in effect by October