CPC’s lubricant blending plant may not be ‘country -friendly’
View(s):The recent announcement of Hyrax Oil signing an agreement with the state-owned Ceylon Petroleum Corporation (CPC) to establish a 4 million-litre (per month) lubricant blending plant in the country has raised questions in the industry. Industry analysts say that last budget’s reduction in the duty gap between raw materials and finished goods of lubricants from 13 per cent to 7 per cent has made it harder for ‘any’ blending plant to record decent margins.
“This has made the cost of production much higher. Now the cost of goods compared to other markets is much higher as well. In India a unit can be produced at 20 per cent or less. In Thailand it’s the same. This is why Sri Lankan players depend on imports,” Kishu Gomes, Managing Director Chevron Lubricants pointed out to the Business Times. Another industry player noted, “7 per cent isn’t enough for any lubricant company to build blending plants.” So this state-initiated move is raising issues as to whether the already loss-making CPC’s latest venture is not ‘country -friendly’.