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Sri Lanka’s petroleum industry: policy, organization and challenges

Author:

R.H.S. Samaratunga

Ministry of Petroleum Industries, LK
About R.H.S.
Secretary

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Abstract

Global petroleum demand is around 90/mbd of which about 50 percent is consumed in OECD countries. Sri Lanka’s petroleum product consumption is minuscule compared with the global demand. The country has long been an import dependent consumer of petroleum products and spends about 24 percent of the import value on them at present (2011). The Ceylon Petroleum Corporation (CPC) has long been a monopoly provider of petroleum products to the local market. However, another player was added to create a duopoly in the petroleum product distribution market in 2003. Several sub sectors of petroleum industry have been liberalized since the 1990s with a view to build a competitive environment in the industry. Emerging trends in the industry indicate that the regulating the country’s petroleum industry is an important area of concern. As seen in many other countries, transport sector is the largest consumer of oil in Sri Lanka. CPC was able meet the total petroleum product demand of the country through its only refinery in the 1970s. Petroleum product demand in the country has been rapidly rising since the 1980s. Hence, the largest quantum of petroleum supplies to the local market has to come from imported refined product sources as the supply capacity of the CPC’s refinery remained fixed. Ensuring petroleum supply stabilities in a manner to support the ongoing rapid socio-economic transformation of the country has been placed high on the current petroleum policy agenda. Government pricing policy for the industry has been consistent since 2005 in which frequent price adjustments in tandem with international price movements has been abandoned. Various petroleum products including fuel oil for electricity generation have been an area of major concern as those supplies have mostly been subsidized creating difficulties in managing CPC during the last several years.

DOI: http://dx.doi.org/10.4038/sljda.v4i0.7102

Sri Lanka Journal of Development Administration, Vol. 4, pp. 39-53, 2014

How to Cite: Samaratunga, R.H.S., (2014). Sri Lanka’s petroleum industry: policy, organization and challenges. Sri Lanka Journal of Development Administration. 4, pp.39–53. DOI: http://doi.org/10.4038/sljda.v4i0.7102
Published on 30 Jun 2014.
Peer Reviewed

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