Sri Lanka has decided to liberalise the country’s loss-making petroleum sector through a comprehensive Public-Private Partnership (PPP) model, Minister of Power and Energy, Kanchana Wijesekera said.
Therefore, he urged relevant private sector players to come forward and support this initiative with their own dollars, stating that the Government was willing to provide necessary infrastructure facilities through Ceylon Petroleum Corporation (CPC) and Ceylon Petroleum Storage Terminals Limited (CPSTL) in order for their proposed PPP ventures to succeed.
Speaking at a recent forum organised by JAAR Corporate Solutions with support from the Friedrich Naumann Foundation (FNF) in Colombo, the Minister also stated that, in addition to the CPC and the Lanka Indian Oil Company (LIOC), the Government is working to permit two to three other companies also for petroleum distribution in the island.
He also stated that steps will be taken to end CPC’s monopoly on the supply of jet fuel in Sri Lanka.
“I believe that these initiatives foster healthy competition in the petroleum industry.” We are currently reviewing proposals from 24 companies that have expressed interest in operating a part of CPC’s filling stations and using the terminal facilities for a fee,” Wijesekera said.
“We will soon shortlist two to three parties,” the Minister said.
The CPC has become a heavy burden for the Government and the Sri Lankan economy due to its poor performance.
The CPC’s debt amounted to Rs 529 billion at the end of 2020, increased to Rs 561.3 billion by the end of 2021.
The amount has further increased to 700 billion by July 2022, which is the highest level of debt for an SOE in Sri Lanka.
Meanwhile, the CPC accounted for 37.3% of public guaranteed debt stock of SOEs. In addition, the cumulative net loss of the CPC at the end of 2019 was Rs 337 billion. This will further increase with the Rs 82.2 billion net loss incurred in 2021 and likely to increase further in 2022 (CBSL-2021).In contrast, the Lanka Indian Oil Company (LIOC), which is the only competitor in the fuel retail market in Sri Lanka, has continuously made profit since its incorporation excepting for a few years. LIOC recorded a 998 million profit before tax for the year ended March 2021 together with positive retained earnings of Rs 12.3 billion as at end March 2022.
By Ishara Gamage