Sri Lanka to enable foreign competition in local gasoline sector
As the bankrupt island struggles to import oil, Sri Lanka’s parliament on Tuesday adopted legislation enabling foreign competition in the local gasoline sector, breaking a 19-year monopoly.
With the exception of the Indian Oil Corporation, which has been active in Sri Lanka since 2003, the action opened the door for foreign oil corporations to enter the country for the first time since the nationalisation of oil industries in the early 1960s.
Energy Minister Kanchana Wijesekera stated that this “would allow global suppliers to participate as retail operators.” The energy sector will be liberalised as a result. According to officials, private enterprises will need to use their own foreign currency reserves to finance the import of oil and commit to keep their earnings in Sri Lanka for at least a year.
The government ran out of foreign currency to import fuel, which forced strict rationing and severe shortages. As a result, the new law had to be passed quickly.
Sri Lanka to enable foreign competition in local gasoline sector
Sri Lanka experienced its greatest economic crisis since gaining independence from Britain in 1948 as a result of the shortages, which led to major protests that culminated to the ouster of president Gotabaya Rajapaksa in July.
Early in the 1960s, Sri Lanka nationalised international oil companies, giving the state-owned Ceylon Petroleum Corporation a monopoly (CPC).
The monopoly of CPC was broken in 2003 when Colombo allowed Indian Oil Corporation, a state-owned company in India, to enter the local retail market.
About a third of the domestic petroleum market is now under the control of the Sri Lankan subsidiary of an Indian corporation, with CPC holding the remaining shares but suffering enormous losses and running out of cash to pay for additional imports.
