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The Power and Energy Ministry yesterday signed an agreement with US-based RM Parks Inc. in collaboration with Shell, marking a significant step towards securing a long-term contract for the importation, storage, distribution, and sale of petroleum products in the country.
RM Parks Inc. will be the fourth supplier to enter the domestic market and will operate under the Shell branding.
“They signed a 20-year agreement to import, distribute and sell petroleum products through 150 fuel stations allocated from Ceylon Petroleum Corporation (CPC),” Power and Energy Minister Kanchana Wijesekera said.
He said approval was also granted for 50 new fuel stations to be established countrywide. “They will upgrade the fuel stations with new automated dispensers, electric charge stations, mini markets and cafes,” he added.
The agreement was signed by RM Parks Inc Vice President Justion Divis and Power and Energy Ministry Secretary Mapa Pathirana; in the presence of President Ranil Wickremesinghe, Power and Energy Minister Kanchana Wijesekera, Foreign Affairs Minister Ali Sabri, State Ministers D.V. Chanaka, IndikaAnuruddha, ShehanSemasinghe, President’s Senior Adviser on National Security and Chief of Presidential Staff SagalaRatnayaka, US Ambassador to Sri Lanka Julie Chung, Secretaries of pertinent Ministries, Government officials, and various dignitaries at the Presidential Secretariat yesterday.
The Cabinet on 27 June 2022, first approved in principle to open up the fuel retail market. The decision came amidst the worst-ever fuel crisis in the country and the rationale was new players will be required to import fuel and sell without foreign exchange from local banks.
Thereafter, the Cabinet on 27 March this year, approved a strategic move to open up the fuel retailing market further with the grant of a 20-year licence to three more global players from China, the US and Australia.
The move comes after the Ministry explored various strategies to address the foreign exchange crisis in Sri Lanka and ensure a steady supply of fuel to consumers.
“This agreement marks a significant milestone in ensuring a reliable and uninterrupted supply of fuel to meet the country’s energy needs amid challenging economic circumstances,” a statement issued by
Presidents Media Division (PMD) noted.
It added that the negotiations with M/s RM Parks reached a fruitful conclusion. RM Parks Inc., in collaboration with Shell, aims to commence operations in Sri Lanka within 45 days after the issuance of the license.
Given the current economic situation, the PMD said it has hindered the Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Company (LIOC) from importing fuel shipments as planned. Insufficient foreign exchange at the time of opening Letters of Credit (LCs) and settling bills has exacerbated the issue. Consequently, the Ministry sought solutions to mitigate these challenges, leading to the invitation of Expression of Interest (EOIs) from reputable petroleum companies.
Following a rigorous evaluation process, several companies were shortlisted and invited to submit detailed proposals. The Cabinet Appointed Special Committee (CASC) and the Technical Evaluation Committee (TEC) carefully scrutinised these proposals and recommended the awarding of contracts to the following companies, subject to negotiations — M/s Sinopec Fuel Oil Lanka Limited, located at F5, Hambantota Maritime Centre, Mirijjawila, Hambantota, Sri Lanka, M/s United Petroleum Ltd, situated at 600 Glenferrie Rd, Hawthorn, Victoria 3122, Australia and M/s RM Parks, headquartered at 1061 N. Main St, Porterville, CA 93257, USA, in collaboration with Shell.
The Cabinet of Ministers approved to award of contracts to the selected suppliers after thorough consideration of the recommendations made by the CASC and the Committee appointed by the Cabinet.
The contract agreement with M/s Sinopec Fuel Oil Lanka Limited and its parent companies was signed on 22 May, following successful negotiations.
