Select industries to be permitted to import fuel

  • Legal amendments made for issuance of special licences

The Cabinet of Ministers has approved the amendment of the Petroleum Products (Special Provisions) Act, No. 33 of 2002 to allow for the issuance of special licences for the import of fuel for selected industries.

“There have been a number of problems in fuel import and distribution recently. To minimise these problems, the Cabinet has decided to allow special licences for specific parties to import fuel for the electricity, fisheries and export industries,” Cabinet Co-Spokesman Dr. Ramesh Pathirana said yesterday (26), while addressing the post-Cabinet media briefing.

Thus, the Cabinet has approved the amendment of the said Act to allow this.

Fuel shortages have seriously affected many industries this year. The fisheries and agriculture industries remain helpless without fuel to power their boats and machinery, especially with the short-term measure taken earlier this month by the Ceylon Petroleum Corporation (CPC) to not issue fuel to cans. Export industries also lament the lack of fuel to power generators and machinery necessary for production. 

Additionally, the Ceylon Electricity Board has been suffering from a severe lack of fuel throughout the year, thus being forced to routinely shut down its thermal power plants, and in turn interrupt national electricity supply. Last month, the public endured up to 13 hours of power cuts on a daily basis due to this reason.

The Petroleum Products (Special Provisions) Act, No. 33 of 2002 allowed for the amendment of the CPC Act, No. 28 of 1961, which in turn allowed the Lanka Indian Oil Corporation (LIOC) to obtain a licence for a 20-year period to operate in Sri Lanka. The CPC is still the only institution to have sole authority over the distribution, storage, and production of fuel in Sri Lanka, the latter aspect of production being done through the Sapugaskanda Crude Oil Refinery.

Speaking to The Morning yesterday, Petroleum Trade Union Confederation Convener Ananda Palitha questioned as to how the proposal to issue special licences will help the struggling industries.

He said: “The usual minimum amount of fuel that can be imported is 10,000 metric tonnes. Which industry in Sri Lanka needs this much of fuel at once? Even the largest Free Trade Zone in Katunayake will not need to import fuel like that. Even if that much fuel is imported by a single party, how can it be stored and distributed safely and properly?”

Furthermore, Palitha claimed that this is just a ploy by the Government to allow India and China to move into the fuel industry in Sri Lanka, threatening its energy security.

Last year, then-Energy Minister Udaya Gammanpila sought to amend the CPC Act by introducing provisions which would dissolve the CPC monopoly on refining oil by allowing an investor to enter into the market with an initial investment of $ 3 billion. 

On 31 December 2021, Gammanpila announced the extension of the lease agreement with the LIOC for the Trincomalee oil tanks. Under to the agreement, the current lease on 14 oil tanks under LIOC control was extended by another 50 years and 24 tanks will be independently developed by the CPC, while the additional 61 tanks will be jointly developed by the LIOC and the CPC, under the newly established Trinco Petroleum Terminals Ltd., in which the CPC has majority shares.