While awaiting the establishment of a new regulator for Sri Lanka’s petroleum industry, concerns are being raised about potential unauthorized market entrants, particularly in the lubricant sector.
The Public Utilities Commission of Sri Lanka (PUCSL), the previous regulatory body, has ceased its activities in market monitoring, consumer and trade education, import inspection, and action against unauthorized operators and product adulterators.
Under a directive from the Energy Ministry, lubricant license fees, previously paid to the PUCSL, are now to be remitted directly to the ministry.
Expressing concerns, Chevron Lubricants Lanka PLC highlighted potential risks associated with this transition. According to MD/CEO Bertram Paul in the company’s annual report, there is a concern that the absence of robust oversight could lead to unauthorized market entries and product adulteration, impacting licensed players, consumers, and government revenue.
In August 2023, the Energy Ministry informed all lubricant players that the PUCSL would exclusively regulate the electricity industry, with a new regulator for the petroleum industry (covering fuels, liquid petroleum gas, and lubricants) slated for establishment in 2024.
Industry stakeholders have welcomed this move towards establishing a comprehensive regulator.
In a recent development, the Cabinet has approved the formation of a panel to draft legislation for the petroleum regulator, overseeing liquified petroleum gas, petrol, diesel, kerosene, aviation fuel, and lubricants.
Over the past five years, the lubricant industry has seen a notable increase in players, nearly tripling from 13 to 35. Despite market declines over the last two years, the government has continued issuing new lubricant licenses.
Looking forward, Paul mentioned Chevron Lubricants Lanka’s cautious optimism about the industry’s future, citing signs of demand recovery in specific segments. However, with 2024 being an election year, he noted that the business environment remains uncertain.
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