News
Foreign companies allowed to sell fuel below CPC price
View(s):- Agreements to be finalised later this month, operations to begin next month
By Damith Wickremasekara
Three foreign companies entering Sri Lanka’s retail fuel market will be allowed to sell fuel below the Ceylon Petroleum Corporation (CPC) prices, the government has decided.
The agreements with the three companies are to be finalised later this month with operations due to begin thereafter within a month, a senior Power and Energy Ministry official said.
China’s Sinopec, United Petroleum of Australia and RM Parks (the United States) in collaboration with Shell Plc will be allowed to enter the fuel retail market in Sri Lanka.
The senior official said that with permission for the incoming companies to sell fuel at prices lower than the CPC prices, the demand for CPC fuel could drop and therefore the Government’s fuel bill could be reduced.
He said that at present, the Government was spending an average of US$ 450 million a month for fuel and the Ministry was expecting that each of the three companies would import an average of US$ 120 million worth of fuel a month, thereby reducing the country’s fuel import bill.
He said the move was likely to have an impact on CPC sales, but would be beneficial to the customers.
The companies will be required to avoid using local banks to raise the US dollars for the imports while the profits could be taken out of the country only after a year, among other conditions.
The Ministry estimates that the three companies collectively would be importing fuel to the tune of US$ 2.2 billion a year and this would reduce burden on the Treasury.
The agreements would cover a 20-year period while the annual renewal fee of US$ 2 million would be charged within the period. After 20 years, the companies could continue operations, subject to negotiations.
The companies would also would be paying for storage fees while a per litre percentage revenue was expected to the Government.
Under the agreements, premium products used by luxury vehicles could be sold by the companies.
CPC trade unions are up in arms against the entry of foreign companies to the fuel retail market as each company will be allowed to operate 150 sheds with each company being permitted to open 50 fuel stations later.
The CPC currently has around 1,200 sheds and will be left with around 700 sheds once the plan goes into operation.
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