By: Staff Writer
October 16, Colombo (LNW): United Petroleum Lanka Ltd., the Australian-owned fuel retailer, has initiated formal dispute resolution proceedings against the Government of Sri Lanka, alleging failure to honour commitments under an exit agreement signed in April 2025. The company claims the Government’s continued inaction and delays in implementing agreed terms have forced it to terminate the exit arrangement and seek legal remedy.
In a statement issued yesterday, United Petroleum Lanka said the dispute stems from the Government’s inability to fulfil key undertakings, despite repeated extensions and follow-ups. The company described the situation as a breach of good faith, which has further eroded investor confidence at a time when Sri Lanka is attempting to liberalise its energy market and attract foreign capital.
United Petroleum Lanka, a subsidiary of Australia’s United Petroleum Group, entered Sri Lanka’s fuel retail market in August 2024 after a Government-led process to bring in foreign investors to enhance competition and service standards. Backed by Australian technical expertise and operational best practices, the company was granted licences and entered into supply, import, and distribution agreements with the Ceylon Petroleum Corporation (CPC) and the Ceylon Petroleum Storage and Logistics Company (CPSTL).
According to the company, these agreements were critical to establishing investor trust in the country’s fuel market reforms. “United Petroleum Lanka complied with its contractual obligations and operated in good faith,” the statement said. However, the firm encountered “persistent challenges” due to the Government’s inability to uphold essential contractual terms, creating what it described as an “economically unsustainable environment.”
As difficulties mounted, United Petroleum suspended its fuel supply operations in December 2024 and agreed to an orderly exit from the market. The exit agreement, signed in April 2025 and endorsed by the Cabinet, was expected to be concluded by early May. Despite the company’s full compliance, a key undertaking from the Ministry of Energy remains unfulfilled, the statement said.
After several months of extensions and unheeded requests, United Petroleum terminated the exit agreement in October 2025 and commenced formal dispute resolution procedures.
The company expressed “deep disappointment” that the same bureaucratic and policy inconsistencies that hampered its operations have now complicated its exit as well. “Our experience underscores the importance of policy consistency, transparency, and adherence to contractual obligations, particularly for nations seeking to attract and retain foreign investment,” the statement noted.
United Petroleum Lanka reiterated that it maintained “integrity and professionalism” throughout its entry, operation, and exit process, affirming its adherence to international corporate and investor standards.
