Financial Times

CPC to be revamped, no fuel price hike yet
By Lenin Amarawickrama
The government plans to restructure the Ceylon Petroleum Corporation (CPC/Ceypetco) to make it more efficient and customer-friendly in order to meet growing competition in the retail market while ruling out an immediate fuel price hike.

Ceypetco has called for applications for consultancy in the proposed restructuring of the former government fuel monopoly. "Ceypetco has been a typical government body with an asset orientation and we want to convert this to a customer oriented one," a senior company official said. "Petroleum has to be identified as consumer products."

The company, although still market leader, urgently needs to train its staff, especially technical staff, to compete with private sector players. The government is going ahead with plans to open up the retail fuel market by allowing a third player into the sector following the entry of Indian Oil Corporation which took over 100 Ceypetco sheds. The third player will be given another 100 petrol sheds but the government has modified the original terms and will only offer a minority stake and management control instead of full ownership.

China's SinopecKong) Ltd. and two Indian firms, BharatCorporation Ltd. and Hindustan Corporation Ltd., are bidding to be the third player. Asked about a possible petroleum price hike in the immediate future given soaring crude oil prices, the Ceypetco ruled it out saying that the phenomenon is not unique to Sri Lanka and that a price hike could affect the entire economy.

"So the subsidy has to be continued and we have to absorb it." The government has spent Rs. 2 billion to subsidise fuel prices since February this year.

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