Sri Lanka: No New Lube Licenses


Sri Lanka reversed a contentious decision to grant additional licenses to lubricant businesses, to the relief of players who claim the market is already saturated.

In late 2013, the government decided to accept applications for an undetermined number of additional marketing licenses to bring in more products and to stimulate price competition.

But Indian Oil Corp.s Lanka IOC PLC, Caltex and other lube suppliers were critical of the governments move and voiced their opinion in a presentation before the Ministry of Petroleum Industries.

A market source familiar with the discussions between industry and the government confirmed Monday that the Public Utilities Commission of Sri Lanka decided not to issue more licenses. The commission had received some 30 applications.

Existing license holders noted that theirs is a relatively small 50 million metric tons per year market, with 13 players operating along with several majors, according to Soumen Ganguly, the senior vice president of lube marketing and production of Lanka IOC.

Sri Lankan lube companies informed government authorities that it may be difficult to do business with 25 or 30 players in Sri Lanka, Ganguly told Lube Report Asia. All players were unequivocal in their opposition to new licenses and had suggested that the Lankan government help better regulate the market by prosecuting those selling substandard oils.

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