Concerns emerge on unauthorised players entering local lubricant sector

While Sri Lanka’s petroleum industry awaits the establishment of a new regulator, concerns are being raised about the potential for unauthorised players to enter the market, particularly in the lubricant sector.
The previous regulatory body, the Public Utilities Commission of Sri Lanka (PUCSL), ceased its activities in market monitoring, consumer and trade education, import inspection and action against unauthorised operators and product adulterators. 

As per the Energy Ministry directive, the lubricant licence fees that were previously paid to the PUCSL are now to be paid directly to the ministry.

An entity expressing concerns in this regard is Chevron Lubricants Lanka PLC.

“With this development, there is a risk that the vacuum could result in a proliferation of unauthorised players and product adulterators, which would be detrimental to the licensed players, consumers and government, in terms of loss of revenue,” said its MD/CEO Bertram Paul in the company’s annual report.

In August 2023, the Energy Ministry informed all lubricant players that the PUCSL would focus solely on regulating the electricity industry, with a new regulator for the petroleum industry, covering fuels, liquid petroleum gas and lubricants, set to be established in 2024.

The industry has welcomed the move to establish a fully-fledged regulator.

In a recent development, the Cabinet approved the appointment of a panel to draft a law for the establishment of the petroleum regulator, which will oversee liquified petroleum gas, petrol, diesel, kerosene, aviation fuel and lubricants.

Meanwhile, the lubricant industry has witnessed a significant increase in the number of players over the past five years, nearly tripling from 13 to 35. The government has continued to issue new lubricant licences, despite a decline in the market over the last two years.

Looking ahead, Paul said Chevron Lubricants Lanka is cautiously optimistic about the industry’s future, noting signs of demand recovery in certain segments. However, with 2024 being an election year, he noted that the environment is fraught with uncertainty.