Local fuel market: Three foreign companies selected

The Power and Energy Ministry is poised to submit a Cabinet paper seeking approval for shortlisted foreign companies to enter the local energy market once the ongoing appeal process is completed, The Sunday Morning learns.

It is learnt that three foreign companies have now been selected and all three companies will be permitted to enter the local energy market. However, the final decision on the three companies will be taken once Cabinet approval is given.

It is reliably learnt that the new companies were assured of a cost-reflective price for petroleum products in the market once they arrived in the country.  

Initially, in October last year, Sri Lanka shortlisted 13 foreign companies following the evaluation of all 26 proposals received in response to the Expressions of Interest (EOIs) called by the Government from reputed companies established in petroleum-producing countries for importation, distribution, and selling of petroleum products in Sri Lanka on long-term agreements.

The Sunday Morning reliably learnt that the Chinese Sinopec Group is also among the shortlisted companies.

The decision to open the petroleum market for more foreign players came as the Government struggled to secure close to $ 500 million monthly to import fuel amidst the worst foreign reserves and currency crisis faced by the country.

The EOIs were requested in July and it was said that the Power and Energy Ministry had received proposals from companies interested in the petroleum business based in India, the UAE, Saudi Arabia, the US, China, Russia, the UK, Malaysia, Norway, and the Philippines.

The Government anticipates entering into long-term contracts with the Ceylon Petroleum Corporation (CPC) to ensure a continuous supply of petroleum products to Sri Lanka, whilst engaging in business using existing fuel stations owned or to be opened by the CPC as well as the infrastructure facilities of the Ceylon Petroleum Storage Terminals Ltd. (CPSTL), based on a facilitation fee.

As per the initial plan announced by the Government, the foreign firms must ensure that all products comply with all Sri Lankan quality standards and parameters of petroleum products. The Power and Energy Ministry will also facilitate the development of new fuel stations and storage terminals depending on the requirement of the company post commencing operations in Sri Lanka.

The process was supposed to be completed last year, but it has been delayed for more than six months due to reasons not known to the public.

As the market leader with over 80% of the market share, CPC is operating over 1,300 filling stations countrywide. The CPC refines around 30% of the product requirements through the refinery and the balance is supplied via importation of the refined products. CPC has a two-thirds interest in CPSTL, which has been established with the aim of storage and distribution of petroleum products.