Govt. beckons foreign oil firms to set up shop in SL

• Power and Energy Ministry calls for Expressions of Interest by 16 August
• Pre-proposal conference on 5 August
• Request for proposals after shortlisting 
• Select firm will have to enter into long-term contract with CPC whilst engaging in business using existing fuel stations owned or to be opened by CPC and using CPC storage terminal
• Govt. will facilitate development of new fuel stations and storage terminal depending on the requirement of successful party
•  Industry sources say global and regional players keen to explore new opportunity in Sri Lanka’s $ 4 b market
• CPC commands 85% market share and Lanka IOC 15%

By Charumini de Silva

Sri Lanka has begun its search for firms from petroleum-producing countries to engage in the importation, distribution, and retail activities, opening up the industry.

The move comes, as the Government struggles to secure 

$ 600 million monthly to import fuel, amidst the ongoing economic crisis.

The Power and Energy Ministry has called Expressions of Interest (EOIs) by 16 August from well-established companies in petroleum-producing countries with a permanent presence in any part of the supply chain. The firms should also be financially viable possessing the ability to import petroleum products by utilising their forex for an agreed period without depending on the Sri Lankan forex market.

The Ministry has arranged a pre-proposal conference on 5 August for prospective firms through physical presence or Zoom.

The Government anticipates entering into long-term contracts with the Ceylon Petroleum Corporation (CPC) to ensure a continuous supply of petroleum products to Sri Lanka, whilst engaging in business using existing fuel stations owned or to be opened by the CPC as well as infrastructure facilities of the Ceylon Petroleum Storage Terminals Ltd. (CPSTL) based on a facilitation fee. 

The foreign firms have to ensure that all products should comply with all Sri Lankan quality standards and parameters of petroleum products

The Power and Energy Ministry will also facilitate the development of new fuel stations and storage terminals depending on the requirement of the company post commencing operations in Sri Lanka.

The selection of suitable companies will be made based on a fair evaluation where the Ministry will shortlist firms initially and a Request for Proposals (RFP) will be made thereafter for the shortlisted companies. 

At present, the State-run CPC contributes around 85% of the total fuel supply to the country, while the remaining 15% is by the Lanka Indian Oil Company (LIOC) which owns one third or around 210 of the fuel stations in the country.

Sri Lanka's fuel imports in 2021 amounted to $ 3.7 billion, up by 47% from the previous year. In the first five months of this year, imports grew by 38.5% to $ 2.38 billion. 

Industry sources said that already several global and regional players have informally expressed interest or firming up plans to tap prospects in the $ 4 billion worth fuel market in Sri Lanka.

“Ensuring an uninterrupted fuel supply to the country has become a challenge due to the current foreign exchange crisis in Sri Lanka. Therefore, it seems appropriate to enter into long-term agreements with companies in the oil-producing countries to enable them to import and sell fuel using their funds so as not to put pressure on the country's foreign exchange problem,” the Ministry noted in a statement comprising weekly Cabinet decisions issued by the Government Information Department last month, following the decision to liberalise the petroleum industry.

On 27 June, the Cabinet of Ministers under the leadership of former President Gotabaya Rajapaksa decided to liberalise the petroleum industry by allowing companies from oil-producing countries to engage in the importation, distribution, and retail activities.