Sri Lanka, on Monday, decided to award licences to three global oil companies to operate in the domestic retail market as part of the government’s efforts to restructure State-Owned Enterprises, including the loss-making Ceylon Petroleum Corporation (CPC).  

Confirming the development in a tweet, Sri Lanka’s Minister of Power and Energy Kanchana Wijesekera said the Cabinet had approved the awarding of licenses to Sinopec, United Petroleum, Australia, and RM Parks, USA, in a collaboration with Shell, to enter the retail market in Sri Lanka. The three companies will each be allocated 150 dealer-operated fuel stations, currently operated by the state-owned Ceylon Petroleum Corporation, and obtain 20-year licences to import, store, distribute and sell petroleum products in Sri Lanka. A further 50 fuel stations will be established at new locations by each company, said the Minister.  

The move is aimed at diversifying Sri Lanka’s retail fuel market that is currently a duopoly, with the state-owned CPC and Indian Oil Corporation subsidiary Lanka IOC, which controls a third of the market.  

Acute shortages

During last year’s economic meltdown, Sri Lanka experienced acute fuel shortages, as the government ran out of dollars to import crude oil. Citizens waited in long queues outside petrol sheds for days together to access fuel, and it was following Indian assistance that supply was partially restored. Subsequently, the government introduced a QR-code system rationing weekly fuel sales to consumers.

Further, in May last year, Sri Lanka raised petrol prices by 24.3 per cent and diesel by 38.4 per cent, a record hike that in turn led to a rapid increase in costs of essentials.  

‘Regional petroleum hub’

Meanwhile, an official delegation from India led by Pankaj Jain, Secretary to the Ministry of Petroleum and Natural Gas, held talks with President Ranil Wickremesinghe in Colombo on Saturday. 

“The delegation led by @Secretary_MoPNG called on President H.E @RW_UNP and briefed him on developments in jointly-identified priority areas for collaboration in energy sector. The President provided his guidance and insights on early implementation of these initiatives,” the Indian High Commission in Colombo said in a tweet. 

The officials also visited Trincomalee in the Eastern Province, where Lanka IOC, Ceylon Petroleum Corporation and the Government of Sri Lanka have agreed to jointly develop World War II-era oil tanks. India has pledged to help Sri Lanka emerge a “regional petroleum hub”.   

Meera Srinivasan is The Hindu’s correspondent in Colombo