Financial Times

Sri Lanka’s lubricant market has finally opened up but local companies are complaining that they are being shut out with preferential treatment given to multinational corporations.

Qualification requirements set forth by the government to operate in the lubricant market are disadvantageous to local business, says Laugfs Holdings chairman W.K.H. Wegapitiya who strongly believes these requirements are unfair and unreasonable.

Caltex Lubricants Lanka Limited, a multinational company and unit of Chevron Corp, has over 70% control of the lubricant market in Sri Lanka, with the remaining 30% being split amongst five other foreign companies - Indian Oil Corporation, Mobil Asia Pacific (Pvt) Ltd, Valvoline Australia (Pvt) Ltd, Shell Trading Middle East (Pvt) Ltd and BP Middle East Ltd/ UAE/Castrol India Ltd, all of whom operate in the domestic market under local agents.

The Laugfs Chairman takes issue with the fact that the government has specified that applicants wanting to enter the lubricant market "must posses at least five years experience in the lubricants business either local or international," as stated in the Public Enterprises Reform Commission (PERC) document on requests for qualifications.

Wegapititya feels that by making the criteria so stringent, the government has essentially prevented local entrepreneurs from entering the lubricant business. "They have protected the market for almost eleven years and now they are opening it up to only foreign multinational brands which is depriving the rights of indigenous companies," he said adding that it is impossible to prove five years of experience if the market has been protected.

"How can we (local companies) prove five years experience if we were never allowed to operate in the market in the first place? These requirements are only benefiting foreign companies." PERC Chairman W.M. Bandusena was unavailable for comment on this matter.

Wegapitiya, however, doesn’t oppose the standards for entry into the lubricant market set by the government. He only requests that the regulations are modified to promote and support home-grown businesses which he feels is essential if the country is to prosper economically.