By:Staff Writer
September 15, Colombo (LNW): A tense row between the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB) has crystallised into a policy fight with concrete fiscal consequences: efforts by the CEB to push competitive international bidding for thermal fuel procurement have been resisted by CPC, while recent CPC-awarded contracts show the state-owned supplier remains the gatekeeper of large fuel deals.
CEB engineers argue competitive bids would discipline prices, secure bulk discounts and protect consumers from arbitrary mark-ups.
Their confidential letter to senior energy and finance officials warns that CPC’s control over pipelines, port access and bulk supply effectively lets it veto any move that would let the CEB buy directly from international traders or alternative suppliers.
The engineers claim recent internal pricing moves including reported increases in naphtha and heavy fuel oil (HFO) are being passed straight to electricity tariffs.
At the same time, public procurement records and media reporting show CPC continuing to run large, centrally awarded supply contracts after inviting bids from its pool of registered suppliers.
For example, the Cabinet approved a contract in May 2025 awarding five shipments of diesel (0.05% MS) to Singapore’s Trafigura Pte Ltd for deliveries from June to November 2025; the CPC called for bids from its registered supplier list and seven bidders submitted offers.
Earlier procurement rounds illustrate the limited, tightly-managed market. The state awarded long-term crude shipments to Vitol Asia (2.1 million barrels, Murban crude) following a CPC-led tender that attracted five bids.
And in August 2025 the Cabinet approved a 1.5 million-barrel Octane 92 supply contract to Aditya Birla Global Trading (Singapore) after the CPC received eight bids. These awards confirm that large purchases are routed through CPC processes not direct open international tendering by major buyers such as the CEB.
CPC’s procurement rules themselves reserve many large purchases for “registered suppliers,” and its procurement documents routinely restrict bidding eligibility to those on the register a mechanism that concentrates access and can limit price competition. CPC tender documents and CPSTL registration guidance filed in 2025 make clear that quotations are normally called from that registered list.
CPC management insists it is not blocking bidding per se but says that if the CEB wants to procure externally, CPC should be released from supply obligations a position it frames as a risk-allocation, not obstruction.
Critics counter that this is a circular logic: CPC’s control of infrastructure plus exclusive procurement channels gives it leverage to protect margins at the expense of tariff-paying consumers.
The clash is more than a bureaucratic spat. With thermal fuel costs accounting for a material share of generation expense, allowing true competitive bidding open to global traders on transparent terms and backed by independent logistics access could reduce generation costs and blunt tariff pressure.
Whether policymakers break the bottleneck around CPC’s procurement architecture will determine if Sri Lanka achieves that saving, or if monopoly dynamics keep electricity prices elevated.
