card system for Govt. employees
State banks, the Ceylon Petroleum
Corporation (CPC) and state enterprises in a joint collaborative
effort are launching a new fuel card system for government
employees which will revolutionize fuel purchasing in
this country, officials said.
This plan is designed to combat the
heavy competition the CPC faces from Lanka Indian Oil
Company (LIOC). The initiative for this is being taken
by the 20 government institutions that fall under the
Strategic Enterprise Management Agency (SEMA), which
in conjunction with Bank of Ceylon (BOC) and People’s
Bank (PB) is going to issue fuel cards to all their
146,000 employees who are entitled to a fuel allowance.
SEMA is considering extending this
facility to the public in due course. The objective
is to create a cashless transaction system with a totally
automated electronic payment system in place instead
of the current manual system in fuel stations.
The fuel card system is intended to
consolidate CPC’s customer base because all refuelling
requirements will be handled by CPC outlets. Currently,
the CPC operates 152 filling stations, the Treasury
owns 107 stations and there are 609 dealer owned stations,
bringing the total to 868. A multi million rupee investment
has been made by banks in the installation of point
of sale terminals. The terminals will generate revenue
for banks through its transaction fee. “The government
spends approximately $1.7 billion dollars a year on
fuel. This system can save billions of rupees in misdirected
subsidies. The biggest foreign exchange consumer is
the purchase of fuel. This is one strategy the government
is adopting to mitigate fuel prices and requires automation
of the system,” said the Chief Operating Officer
of SEMA Chris Dharmakirti.
Several benefits arise out of the
fuel card system. The CPC, for example, is able to secure
a loyal customer base out of all SEMA institutions.
Further the fuel card can be used as a marketing tool
to hold onto the dealer networks since they can guarantee
a loyal customer base through the fuel card system.
“This provides an overall advantage
to all the stake holders involved, to CPC dealers government
banks, government departments and for CPC itself. Besides
the fact that the card generates a loyal customer base
this is a good advertising arrangement and the brand
image of CPC will improve,” Metsiri Wijeyagoonawardana,
acting Chairman of CPC told The Sunday Times FT.
The banks get an opportunity to issue
a debit card to SEMA institution employees and the institutions
themselves are able to monitor fuel consumption and
the purchasing patterns of their employees, leading
to abuse prevention at the pump.
The fuel card, which will have a photo
ID of the driver and other information of entitlement
can track all fuel purchases, how much fuel was pumped
and at which stations the card was used, providing a
This is an essential aspect of the
card since there is zero potential abuse. Use of this
card also reduces the exposure of filling stations in
terms of the amount of cash they carry. This has the
potential of reducing robberies of filling stations,
particularly in isolated areas of the country.
An essential feature of the introduction
of the card is that it will result in better cash flow
management for petrol stations. Currently, many government
vehicles purchase fuel on credit. Debt collection becomes
a huge problem for these stations and their receivables
run into millions of rupees. If all government agencies
can purchase fuel through a debit card, the problem
of receivable collections will not arise.
Banks can further benefit from the
fuel card plan by offering auto loans, marketing loan
products. The card also enables the government to directly
target the recipients of the fuel subsidy better through
the card infrastructure where the subsidy payment would
be made directly to individual bank accounts restricting
any form of abuse of the subsidies made available to
The card database will also be linked
to paying institutions such as the Register of Motor
Vehicles (RMV), the paying institutions, and the driving
licence and national identity card of the driver. SEMA
also wants to install vehicle tracking devices, particularly
for the Ceylon Transport Board (CTB) vehicles and other
selected government institutions. This is a costly process
but is crucial in identifying abuse of the system.
A training programme for the stake
holders involved in the new venture has already commenced
along with a seminar and a launch meeting which was
held on 1 September 2006. The fuel cards will be launched
this month and the process is expected to be completed
by the end of this year. The timeframe for total automation
is estimated to be three years.