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Concerns mount over potential for unauthorised players in SL’s Lubricant Sector amid regulatory changes

May 07, Colombo (LNW): Amidst the anticipation surrounding the establishment of a new regulatory body for Sri Lanka’s petroleum industry, concerns have emerged regarding the possibility of unauthorised entrants, particularly in the lubricant sector.

The former regulatory authority, the Public Utilities Commission of Sri Lanka (PUCSL), has ceased its functions in market monitoring, consumer and trade education, import inspection, and action against unauthorised operators and product adulterators.

Following a directive from the Energy Ministry, the lubricant licence fees previously paid to the PUCSL are now to be remitted directly to the ministry, raising apprehensions among industry players.

Chevron Lubricants Lanka PLC has voiced its apprehension over this development, expressing concerns about the potential proliferation of unauthorised players and product adulteration in the absence of robust regulatory oversight.

Bertram Paul, MD/CEO of Chevron Lubricants Lanka, highlighted these concerns in the company’s annual report, emphasising the risks posed to licensed players, consumers, and government revenue.

In August 2023, the Energy Ministry notified lubricant players that the PUCSL would shift its focus solely to regulating the electricity industry, paving the way for a new regulator for the broader petroleum industry, covering fuels, liquid petroleum gas, and lubricants, expected to be established in 2024.

The industry has welcomed the initiative to establish a comprehensive regulatory framework.

In a recent development, the Cabinet approved the formation of a panel to draft legislation for the creation of the petroleum regulator, tasked with overseeing liquified petroleum gas, petrol, diesel, kerosene, aviation fuel, and lubricants.

Meanwhile, the lubricant industry has witnessed a notable increase in the number of players over the past five years, nearly tripling from 13 to 35.

Despite a downturn in the market over the last two years, the government has continued to issue new lubricant licences.

Looking ahead, Paul expressed cautious optimism about the industry’s prospects, citing signs of demand recovery in certain segments.

However, he noted that the upcoming year, 2024, being an election year, introduces additional uncertainties into the environment.

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