United Petroleum Lanka (Pvt) Ltd, a significant long-term overseas investor and Australian-owned subsidiary of United Petroleum Group, has expressed ‘deep’ disappointment with the Sri Lanka government initially in its withdrawal from the local fuel distribution market and subsequently from dispute proceedings.
In a statement on Monday, it said the company faced persistent challenges because of the Government’s failure to uphold critical terms of the agreement. These circumstances created an uncertain and economically unsustainable environment, undermining the long-term viability of the company’s investment in Sri Lanka. Following the Government’s deviations from key contractual commitments, United Petroleum Lanka was ultimately compelled to suspend fuel supply operations in December 2024 and withdraw from the Sri Lankan market.
To ensure an orderly exit, United Petroleum and the Government of Sri Lanka entered into an exit Agreement in April 2025, endorsed by the Cabinet and scheduled for completion in early May 2025. United Petroleum Lanka met all its obligations under the agreement. However, despite repeated follow-ups and extensions granted to allow the Government additional time to fulfil its commitments, a key undertaking from the Ministry of Energy remains unfulfilled. Consequently, United Petroleum Lanka was left with no option but to terminate the exit agreement and initiate formal dispute resolution proceedings in October 2025.
“United Petroleum Lanka has expressed deep disappointment over the challenges it faced during its operation and now similar challenges have extended to its exit from the country too,” the statement said.
The company had launched its operations in the Sri Lankan market in August 2024 with immense enthusiasm and commitment. With technical expertise and best practices of Australia's highly competitive fuel retail industry, United Petroleum Lanka aimed to enhance local energy industry service levels, efficiency, and competition.
Following a government-led expression of interest and due diligence process to attract foreign investment, United Petroleum Lanka was granted a licence to operate and entered a supply, import, and distribution agreements with the Government of Sri Lanka, the Ceylon Petroleum Corporation (CPC), and the Ceylon Petroleum Storage and Logistics Company (CPSTL).
The agreements were key to the company’s entry and investor confidence in Sri Lanka’s envisioned liberalised fuel market. United Petroleum Lanka complied with its contractual obligations and continued to operate in good faith.
United Petroleum stated that while its entry in Sri Lanka began promisingly and collaboratively, the difficulties that faced it prove the importance of policy consistency, openness, and adherence to contractual arrangements as Sri Lanka continues to attempt to attract and retain foreign investment.
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