The Sri Lankan cabinet on March 27 decided to grant licenses to foreign oil companies to sell oil in the domestic retail market. Three companies — China’s Sinopec, United Petroleum of Australia, and RM Parks of the United States in a collaboration with Shell — will soon start operating in the country.
These companies will be allowed to import, store and distribute petroleum products for 20 years. They will be allowed to operate 150 fuel stations that are currently run by the state-owned Ceylon Petroleum Corporation. Moreover, they will establish 50 fuel stations at new locations.
The entry of Chinese, American and Australian oil firms in Sri Lanka is significant as the island nation only has two major oil companies. Ceylon Petroleum Corporation, which is owned by the government, controls 80 percent of the fuel supply, while the Sri Lankan subsidiary of the Indian Oil Corporation — Lanka IOC — controls the rest.
The latest decision comes at least nine months after the government decided to open Sri Lanka’s oil retail market to “companies from Oil producing nations” to resolve acute shortages of fuel during its worst economic crisis since gaining Independence in 1948.