Lubricant market in Sri Lanka hurt by adulteration
Although the total market share of the lubricants in Sri Lanka is Rs. 65 million, some 20 per cent of the traders are engaged in selling adulterated lubricants.
“I have brought this to the notice of the Public Utilities Commission (PUC) and the Ministry concerned regarding 30 such traders who sell adulterated lubricants but have not heard from media or from any other market sources of raids being conducted on them,” noted Chevron Lubricants Lanka PLC CEO Kishu Gomes speaking during a public consultation on Sri Lanka’s lubricant market organised by the PUC in Colombo this week.
He said some unlicensed players have been importing 10 per cent of the lubricants to the country illegally despite having paid a sum of Rs. 80 million to the PUC last year.
He said there are 13 players engaged in the lubricant market with 22 international brands from countries such as the US, UK, France, India and China operating in Sri Lanka.
As a result consumers have access to quality lubricants in Sri Lanka. He said these companies have paid large sums of money amounting to Rs. 300 million to the government. The growth of the lubricant market in the past few years was around 3.1 per cent and during the past 10 years it has dipped to 2.5 per cent. During 2012 there was a further decline of 4 per cent of the market. “When there is a steady decline in the growth of the lubricant market is it wise to grant more licenses to new players?” he asked.
He said there is no facility in Sri Lanka to test the purity and quality of lubricants imported to the country. Under the Penal Code those who adulterate lubricants are fined Rs. 1000 or so, he said. Meanwhile a regulatory and a policy framework will be introduced by June 2018 by the government to regulate the lubricant market in Sri Lanka to provide a better quality lubricant service to consumers. Lubricants are used mainly to reduce friction and wear that occurs between two moving surfaces and to reduce operating temperatures, minimise corrosion of metal surfaces and keep out contaminants.
The lubricant comprises of lubricants and greases derived from mineral oil or synthesised from chemical compounds for automotive, industrial and marine applications. It is regulated primarily under the Ceylon Petroleum Corporation Act No 28 of 1961 by the Ministry of Petroleum Resources Development with the advice and assistance of the PUC.
Although the market is liberalised, an authorisation is required to import, export, blend, produce, distribute, supply or sell lubricants which is granted only to qualified parties. Director -Department of Trade and Investment Policy, J.R.C. Jayatilake said the budget proposal of 2016 called for the liberalisation of the lubricant market in Sri Lanka and subsequently a cabinet decision made in 2016 to instruct the Petroleum Ministry to issue new licences to new players to enter the Sri Lanka lubricant market.
Ministry of Petroleum Resources Development’s Additional Secretary (Development ) A.H.S. Wijesinghe said that his ministry imposes a fee of Rs. 5 million annually from importers of lubricants in addition to Rs. 2.5 million levied every six months along with 7.5 per cent of the total value of lubricants imported to be paid to the PUC.
At present there are 13 players in the local market engaged in the importation of lubricants to the country.
However due to complaints received regarding the purity and inferior quality of lubricants available in the market, the ministry along with the police and the PUC have launched an investigation to take legal action against the perpetrators. Chief Operations Officer -Environmental Foundation Ltd Ms. Chamila Weerathunghe spoke of the environmental hazards when disposing of waste lubricants.