CPC profits curbed by foreign competition: CPSTL Chairman

Tuesday, 5 November 2024 00:30 - - {{hitsCtrl.values.hits}}

Claims CPC’s pricing flexibility is restricted by agreements with foreign petroleum firms operating in SL
Says political influence and foreign competition impact CPC’s ability to function independently despite recent profits
States CPC posted Rs. 120 b profit in 2023; this year’s profit so far is only Rs. 27 b
Questions foreign companies’ commitment to local market stability

CPSTL Chairman D.A. Rajakaruna

Ceylon Petroleum Storage Terminals Ltd. (CPSTL) Chairman D.A. Rajakaruna revealed yesterday that despite the Ceylon Petroleum Corporation (CPC) returning to profitability, the State-run enterprise remains unable to function independently due to the influence of foreign petroleum companies operating in Sri Lanka. Addressing concerns over recent adjustments in fuel prices, Rajakaruna noted that the CPC’s flexibility in reducing prices is restricted, largely due to the presence of and agreements with foreign players.

“Only the price of Octane 95 petrol and Super Diesel prices were reduced in the latest price revision, in line with the 2022 pricing formula applied to all market participants. If the CPC was able to operate independently, we could have reduced prices across more fuel types,” he told journalists yesterday, pointing out that the Corporation was hamstrung by decisions made under political pressure.

He claimed that political interference had fostered the perception that the CPC could not operate sustainably, leading to the entrance of foreign firms.

“Last year, the CPC posted a profit of Rs. 120 billion, although it has only achieved Rs. 27 billion in profits so far this year,” he pointed out. Rajakaruna argued that the CPC had the potential to operate autonomously without political interference, evidenced by its recent profits.

Foreign competitors such as Lanka IOC, Sinopec Lanka Energy Ltd., RM Parks Ltd., and Australia’s United Petroleum entered the market following Government agreements, which, Rajakaruna explained, required all companies to follow the pricing formula implemented in 2022. “These companies adjust their prices based on this formula, claiming that it impacts their ability to meet profit margins. Consequently, profits intended for the public are redirected to foreign companies,” he said, criticising how previous administrations accommodated these foreign interests.

Rajakaruna questioned whether foreign petroleum companies were true competitors or simply profit-driven investors with limited commitment to local market stability.