• Floor and ceiling pricing for fuel awaiting Cabinet nod

The Government’s move to allow three foreign players to enter the local energy market is facing delays as negotiations with Australia-based United Petroleum (Pty) Ltd. are still ongoing, The Sunday Morning learns.

It is learnt that the Government was anticipating that all three players – Chinese petro giant Sinopec, US-based RM Parks-Shell, and Australia’s United Petroleum – would enter the market next month following agreements being signed in Colombo. 

However, it is learnt that negotiations are ongoing with the Australian company and that no agreement has yet been reached. 

Sri Lanka last month signed agreements with Sinopec and RM Parks-Shell, which are expected to commence operations soon.

When contacted, Ministry of Power and Energy Secretary M.P.D.U.K. Mapa Pathirana confirmed that negotiations with United Petroleum were ongoing, but would not comment on a timeline for their conclusion.

However, sources close to the matter told The Sunday Morning that concerns had been raised about the slow progress of the negotiation process with United Petroleum, given that Sinopec and RM Parks-Shell had already penned agreements. 

The Sunday Morning earlier reported exclusively on RM Parks and Sinopec seeking a floor and ceiling price for the fuel pricing formula the new players will have to abide by once in operation.

When asked about the current fuel price formula and if the proposed ceiling and floor price fluctuation was already in effect, Pathirana told The Sunday Morning that the latter needed Cabinet approval to be put into effect. The current fuel price formula stood as is, he added.

The Lanka Indian Oil Company (LIOC) was the first foreign player in the local energy market and is expanding its operations, including at the strategic Trincomalee Oil Tank Farm, which it is jointly reviving with State-owned Ceylon Petroleum Corporation (CPC).  

Under the 20-year agreements signed by Sinopec and RM Parks-Shell, each entity is to gain 150 fuel stations. The Cabinet of Ministers has approved 450 fuel stations which were held by the Treasury to be transferred in ownership to the three new players.