CPC revenue drops in 1Q 2024, competition from Sinopec
View(s):By Bandula Sirimanna
In the face of competition with a new Chinese player, the Ceylon Petroleum Corporation (CPC) has been compelled to reduce fuel imports to US$648.71 million in the first four months of 2024 compared to $828.4 million in the same period of 2023, the Finance Ministry’s latest fiscal position report revealed.
Another reason to reduce the quantity of fuel was the increase in average import price of crude oil in the global market to $ 89 per barrel by the end April 2024 from $77 per barrel in December 2023.
A decrease in import costs, in line with the decline in oil quantities due to the entrance of new players to the market, has resulted in the decline in the cost of sales for CPC by 13.5 per cent to Rs. 337.4 billion in the first four months of 2024, compared to Rs. 390.1 billion in the same period of 2023.
Consequently, CPC’s turnover also posted a notable decrease of 16.6 per cent in the first four months of 2024 to Rs. 389.1 billion, compared to Rs. 466.8 billion in the same period of 2023.
Therefore, the profit of the CPC decreased sharply by 68.7 per cent to Rs. 13.6 billion in the first four months of 2024, compared to Rs. 43.4 billion in the same period of 2023, it added.
Due to the policy reforms implemented in the energy sector including the reintroduction of the pricing formula, CPC was able to continue its profit momentum since 2023 and as a result, the Corporation’s trade and other payables decreased by 15.6 per cent to Rs. 153 billion as at end April 2024, compared to Rs. 181.2 billion as at end 2023.
Further, CPC no longer owes any liabilities to Bank of Ceylon and the payable amount to the National Iranian Oil Company was reduced to $201 million as at end April 2024, a high official of the ministry disclosed.
New player, China’s Sinopec has invested $100 million in the project, which includes the import, storage, and sales of fuel. The project will involve 150 privately-owned fuel outlets currently operated by the CPC.
Additionally, 50 new fuel stations will also be established. The agreement allows the project to operate for 20 years under the oversight of Sinopec Energy Lanka, in accordance with the Sri Lanka Board of Investment Act No. 17.
The company has imported 42,561.98 MT of petrol at a cost of $ 52,6 million at the end of September 2023 and its turn over from the sales of this stock of petrol was around Rs.15,24 billion, power and energy ministry data shows.
Indian Oil Corporation, the second player has invested $62 million, for the first phase, and $38 million in the second phase in 2002-22 years ago.
Lanka IOC PLC (LIOC) reported higher revenue of Rs.75.1 billion for the three months ended March 2024.
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