By The Pulseline News Desk
President Anura Kumara Dissanayake has questioned whether opening Sri Lanka’s fuel market to private suppliers has delivered the competition and efficiency that were originally expected, arguing that the move has reduced the Ceylon Petroleum Corporation’s (CPC) flexibility in managing fuel prices.
Speaking on the country’s fuel market, Dissanayake has said the CPC would have had greater room to manage fluctuations in global fuel prices and maintain an efficient service had the market remained entirely under state control.
“We could have managed price fluctuations and provided a better service. But now we do not have that ability because the private sector holds a share of the market,” the President has said.
Private companies were initially brought into the market on the premise that competition would force the state-owned CPC to become more efficient. However, Dissanayake has questioned whether that objective had been achieved, pointing instead to a significant increase in the CPC’s share of the diesel market.
According to the President, the CPC previously accounted for about 58% of diesel sales, but its share rose to 74% last month.
He has attributed the increase partly to private suppliers being unable to compete at prevailing fuel prices, resulting in a substantial reduction in their supplies.
The shift comes as the Government continues to confront the challenge of keeping domestic fuel prices manageable while responding to fluctuations in international petroleum prices.
Dissanayake has also pointed to the CPC’s financial performance as evidence of the state-owned petroleum company’s stronger position in the market.
The CPC has recorded a Rs. 36 billion profit last year, while Ceylon Petroleum Storage Terminals Limited (CPSTL) has recorded a Rs. 3.5 billion profit, according to the President.
He has said the CPC had already recorded a Rs. 28 billion profit so far this year.
The President has further highlighted the changing financial position of state institutions that had previously relied heavily on bank borrowing, saying they were now operating from significantly stronger financial positions.
The comments come against the backdrop of a major restructuring of Sri Lanka’s petroleum sector following the economic crisis, when the Government moved to introduce private-sector participation in fuel imports and distribution.
The policy was intended to reduce the CPC’s dominant position and introduce competition into a market historically controlled by the state-owned corporation.
Dissanayake’s remarks, however, indicate that the Government is now examining the practical consequences of that model, particularly the extent to which private-sector participation affects the State’s ability to respond to international price movements and manage domestic fuel prices.
The President’s argument also puts the CPC’s improved financial performance at the centre of the debate over the future structure of Sri Lanka’s fuel market: whether competition from private suppliers should remain the principal mechanism for improving efficiency, or whether a financially stronger CPC should have greater room to use its market position to manage prices and supply.
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