The Cabinet of Sri Lanka authorized the country’s Public Utilities Commission last week to act as regulator of its lubricants industry, part of the government’s broader efforts to overhaul management of the domestic market.
The PUCSL previously served as a shadow regulator, advising government ministries on policies involving lubricants but not possessing specific powers to enforce laws. Following the cabinet’s decision, industry players are looking for the commission to provide an effective check on the illegal trade of lubes in Sri Lanka.
Lanka IOC Senior Vice President B.B. Patra welcomed the decision, but expressed doubt about PUCSL’s ability to make a difference on its own without the involvement of the country's Ministry of Finance.
“Some complex issues are involved in the lubricants trade,” he said during an interview. “People take advantage of ambiguous product descriptions and are importing lubricants as brake oils and chemicals to pay a tax of merely 4 percent, whereas they pay a 30-percent tax to import lubricants. This creates an unfavorable situation for them.
“Without a change in the law relating to product description, which is the finance ministry’s domain, PUSCL cannot do much to stop illegal import of lubricants in Sri Lanka,” Patra said. PUCSL will only have a positive impact on the market if it puts an effective check on sales of spurious products and counterfeit brands. Legitimate suppliers will have to wait and watch the commission’s performance, he added.
T.G. Jayasinghe, chairman and managing director of state-owned Ceylon Petroleum Corp., said the Ministry of Petroleum and the PUCSL are finalizing the legal framework for the latter’s regulation of the industry. The legislation should take effect soon, he said, adding that he expects an effective check on the practice of misclassifying lubricant imports in order to avoid duties, a big complaint of licensed suppliers.
Speaking to Lube Report Asia, Jayasinghe also stated that the government will increase registration fees for lubricant suppliers by Rs 1 million (U.S. $6,877).
The Sri Lankan Cabinet previously decided to grant more licenses for lube suppliers. Currently, 13 companies are licensed to sell lubes on the island nation. The cabinet also instructed the Consumer Affairs Authority to enact legislation needed to ensure the quality of lubricants available to the public, and directed the Sri Lanka Customs and Department of Import and Export Control to strictly impose the guidelines issued by the Ministry of Petroleum Resources Development that affect the import of lubricants.
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