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11 companies permitted to import and sell fuel to private sector in US dollars
View(s):By Feizal Samath
The government has permitted 11 companies, with a valid bunker licence, to independently import fuel and sell it to any private-sector entity that can pay for the supply, strictly in US dollars, to overcome pressure on oil stocks imported by state agencies for public use.
The companies, listed in a March 17 letter sent by Energy Ministry Secretary K.T.M. Udayanga Hemapala, have been authorised to sell fuel, including diesel, low-sulphur fuel and high-sulphur fuel, to exporters, power generation companies, registered tourism service providers, licenced telecommunication providers, and (any) other industries for three months with effect from March 17. The inland transport sector, however, is not eligible for this special facility, the letter said.
The companies are Lanka OIC, Lanka Marine Services Pvt Ltd, Lanka Maritime Services Ltd, Lanka Bunkering Services Pvt Ltd, Moceti International Pvt Ltd, InterOcean Energy Pvt Ltd, McMarine Pvt Ltd, Sinopec Fuel Oil Lanka Pvt Ltd, Spence Sea Horse Marine Pvt Ltd, Serdaka Global Pvt Ltd, Hawks Colombo Pvt Ltd and FitsOil Pvt Ltd.
Separately, a top economist, who declined to be named, said the government has enough buffers in terms of fuel supply and foreign exchange reserves – which are at the highest level of US$7 billion – for the next few weeks. Asked what if this conflict extends to six months in a hypothetical case, his response on the economic impact was, “It’s anybody’s guess”.
He said as of now inflation is down to a single digit, and the authorities are expecting a bumper Maha harvest (end of this month) as sufficient fertiliser was distributed to farmers, while pointing out that the authorities should continue to pass on oil prices at prevailing market rates and cushion the blow to vulnerable communities through subsidies.
The government’s move to allow private sector fuel sales, precipitated by the fuel supply crisis owing to the turbulence in West Asia, comes on the back of a March 11 submission to the government by the Ceylon Chamber of Commerce.
The Chamber had proposed “allowing licensed local bunkering companies to procure fuel independently for supply to export-oriented industries and tourism operators, potentially on a foreign currency basis.” Similar arrangements were successfully utilised during the recent economic crisis to sustain key sectors without adding pressure on domestic fuel supplies, it pointed out.
It also recommended adopting a strategic approach to fuel procurement, including exploring supply arrangements with a broader pool of international suppliers. Ensuring the availability of aviation fuel was also highlighted as critical to sustaining inbound tourism, it said.
The fuel is supplied by the Sri Lanka Ports Authority’s distribution facility at Bloemendhal Road, Colombo.
Meanwhile, offers are flowing into the Ceylon Petroleum Corporation (CPC) from agents vying to supply diesel, petrol, crude and furnace oil, and the CPC will require a performance bond of US$1 mn; payments will only be made once the fuel arrives and is tested in the Corporation’s accredited laboratory.
CPC has said they have shipments lined up for the next few weeks. Market analysts said, however, that it remains to be seen if they will all arrive. “When it comes to the offers being made to CPC, there will only be a few genuine ones,” they warned, adding that prices are likely to go up further.
Meanwhile, Lanka Coal Company (Pvt) Ltd (LCC) awarded its emergency tender for 300,000MT (five shipments) of coal to an Indian company named Taranjot Resources (Pvt) Ltd, which is represented locally by Advantis, part of the Hayleys Group. At US$142 per metric tonne, the total value of the emergency procurement is around US$9 million.
Separately, Trident Chemphar’s delayed shipments are due to keep arriving over the next few weeks despite Lakvijaya not being able to generate optimum electricity from its coal. It was revealed in Parliament’s Sectoral Oversight Committee (SOC) on Infrastructure and Strategic Development on Thursday that the bottom ash generated from burning the coal was significantly high.
The Public Utilities Commission of Sri Lanka (PUCSL) told the SOC that on Wednesday, there was a night peak—when the coal power plant is most needed to provide cost-effective electricity to the national grid—shortage from Lakvijaya of 176 MW; on Tuesday, of 165 MW; and on Monday, of 148 MW.
LCC officials also said coal from Trident’s ninth shipment failed parameter tests conducted by Cotecna, the accredited laboratory chosen by Lakvijaya. This was the second shipment that didn’t pass quality requirements; the first one had also failed.
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