EOIs to be called for new lubricant import licences

By Nishel Fernando 
The Petroleum Resources Development Ministry is preparing to call for Expressions of Interest (EOIs) this week, to issue new licences for lubricant imports, paving the way for new players to enter into the industry, under the third round of liberalisation of Sri Lanka’s lubricant industry, based on a 2016 budget proposal.

Petroleum Resources Development Ministry Secretary Upali Marasinghe told Mirror Business that the Cabinet approval to call for EOIs has been granted two to three weeks back. 

“We are going to advertise on newspapers very soon, somewhere within this week,” he noted.
Marasinghe earlier said that the ministry might issue five to six new import licences. However, he noted that the number of new import licences to be issued would depend on the soundness of the proposals.

“The issuance of the number of new import licences would depend on the project proposal we get. We are going to select the most qualified people,” he added.  

Several number of new players eyeing Sri Lanka’s lubricant market, including Germany’s largest lubricant manufacturer Liqui Moly, which is planning to set up a distribution network with its local distributor Semini Motors, to sell its high-standard, high-quality and environmentally friendly lubricant products in Sri Lanka.

The Petroleum Resources Development Ministry had decided to move ahead with the third round of liberalisation following a study, which found evidence backing the liberalisation of Sri Lanka’s lubricant market to allow new players, despite the objections from certain players in the market, who were earlier successful in averting attempts to further liberalise the industry. 

Chevron Lubricants Lanka PLC Chairperson Rochna Kaul expects that the competition within the lubricants industry would further increase with the anticipated issuance of licences to new entrants.
However, she expressed concerns over the lack of an effective mechanism to control illegal operators in Sri Lanka’s lubricant industry. 

Meanwhile, the shadow regulator of the lubricant industry, the Public Utilities Commission of Sri Lanka, recently held a public consultation on the draft regulatory tools related to the quality and price of lubricants recently; the outcome of the public consultation is expected to be published in December this year. 

Moreover, an advisory on national standards for petroleum, which includes lubricant products and fuel, is also set to come out on October 22 this year. 

Sri Lanka has 13 market players and 22 authorized lubricant brands, while around 70 percent of the lubricant market is served by 10 licence holders. The large market players such as Chevron Lubricants, which had a 45 percent market share as of 2016, had opposed further liberalisation, citing that Sri Lanka’s lubricant market is mature and competitive.