The Sri Lankan lubricant market is heading downhill due to reduced vehicle imports and high taxes as well as high inflation along with high fuel prices. These factors have slowed down lubricant sales in addition to consumers too cutting on lubricants use. Under the present circumstances it is extremely difficult for lubricant players to survive without local manufacturing blending plants in Sri Lanka, Managing Director of Chevron Lubricants Lanka, Kishu Gomes told a press conference in Colombo this week.
He said that only about two to three players will be able to weather the storm in the next 3-4 years, adding however that Chevron and LIOC have local manufacturing plants at Mutwal and Trincomalee, respectively.
He expressed concern on the rapid growth in the grey market in the Sri Lankan lubricants industry which will impact badly on the industry. He said if regulators fail to pay immediate attention on the lubricant grey market, within five years time it will have a major impact on the country’s transport system and the economy. Mr Gomes said the high inflation rate, decline in the vehicle population in the country and high fuel charges have resulted in the negative market growth of 9 % during the first eight months of this year. The size of the local lubricant market is 47 million litres per annum, he said.
In spite of these obstacles, Chevron Lubricants Lanka is targeting revenue of over Rs. 5.7 billion this year. The company expects to pay Rs. 3 billion to the government as taxes which is 54% of its revenue, he said. He noted that the company is carrying out its functions, and social responsibility projects while sharing new technology and know-how by properly managing the balance 48% of the revenue. It has been able to effectively control its costs and thereby grow profitability in a challenging environment, he said. The company imports and blends lubricants for sale locally and for export to Bangladesh and the Maldives.