Foreign fuel companies to ink agreements with Sri Lanka for retail sales in May

• China’s Sinopec and US-based RM Parks in collaboration with UK’s Shell PLC will commence operations from June

The Government has decided to sign agreements with China’s Sinopec and with US-based RM Parks in collaboration with UK’s Shell PLC next month to open up the fuel retailing market further with the grant of a 20-year licence.

Power and Energy Minister Kanchana Wijesekera took to twitter yesterday to announce that it was decided that both agreements will be signed in May, whilst the operations would commence 45 days thereon in June.

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“A team of officials from Sinopec visited Sri Lanka to finalise the agreements and commencement of operations for retail fuel sales on Tuesday,” he added.

Minister Wijesekera noted that the timeline, conditions of the relevant agreement, logistics and other concerns were discussed with the technical experts from Sinopec, whilst conducting an online meeting with the RM Parks-Shell team.

“From the observations made by RM Parks-Shell technical officials that visited CPSTL tank farm last week, offered to upgrade CPSTL berthing facilities to be in line with international standards and safety requirements,” he added.

The Minister also noted that officials from the Power and Energy Ministry, Central Bank of Sri Lanka (CBSL), the Board of Investment (BOI), Ceylon Petroleum Corporation (CPC) and the Ceylon Petroleum Storage Terminals Ltd., (CPSTL) were also present at the meeting on Tuesday.

On 27 March, the Cabinet of Ministers approved a strategic move to open up the fuel retailing market further to three more global players from China, the US and Australia. All three companies will be allocated 150 dealer-operated fuel stations each of which is currently operated by CPC. 

The companies will be granted a license to operate for 20 years to import, store, distribute and sell petroleum products in Sri Lanka. A further 50 fuel stations at new locations will be established by each selected company.

 At present State-owned Ceylon Petroleum Corporation and Lanka IOC PLC are the two licenced operators. Of the 600 outlets for the three new players, 450 would be from the CPC-operated base. LIOC has a network of 213 retail outlets serving 12% of the country’s retail fuel market. It will be adding 50 more outlets starting this year.

Initially on 27 June 2022, the Cabinet of Ministers approved in principle to open up the retail market. The decision came amidst the worst-ever fuel crisis Sri Lanka faced, and the rationale was new players would be required to import fuel and sell without foreign exchange from local banks.