Sri Lanka throws open lube market for 6 new firms

Sri Lanka threw open its lubricant market last July, calling for bids from interested investors to blend lubricants locally or import and sell packed products.

Five firms, Bharat Petroleum (India), Gulf Oil International, Motul (France), Total S.A. (France) and Sinopec (China) has been allowed to trade and distribute lubricants, Information Minister and Cabinet Spokesman Anura Yapa said.

Lanka Indian Oil Corporation has also been allowed to start a lube blending plant in Sri Lanka, ending a monopoly by Caltex Lubricants, the Sri Lankan arm of Chevron Texaco.

Laugfs – a local petroleum retailer, who is already in the Liquefied Petroleum Gas business in Sri Lanka, has been given provisional approval subject to completion of additional requirements.

Toyota Tsushu Corporation and Waxpol International Industries were also given provisional approval subject to completion of remaining requirements.

"The government of Sri Lanka will enter into relevant lubricant agreements with the following three parties, which are complete in many aspects but not fully compliant. If and when they fulfill all requirements and can be considered successful," Yapa said.

Sri Lanka's Public Enterprise Reform Commission and the utilities regulator, who have been handling the lubricant liberalization process, came under a fire earlier for including a clause that required previous experience to start blending operations.

Because blending has not been allowed in the country earlier, no local firm would be able to satisfy the criteria, making blending the exclusive preserve of foreign companies.

Applications of Anura Trading House, Axel Gulf FZE, Galcol Ltd, McLarens Lubricants Ltd and PSP Specialists have been rejected.

The licenses would be on a revolving basis, with applications called for every four months.

Sri Lanka's lubricants market is valued at 6 billion rupees or 45,000 kilolitres and growing at 10 percent a year. The automotive market holds about 80 percent of sales.

There are six brands that currently operate in the market. Caltex dominates with an estimated 72 percent share, LIOC holds about 20 percent and the balance eight percent is split between Mobil, Valvoline, Shell and BP/Castrol.