CPC TUs all out to protect market share

by Gamini Warushamana

Ceylon Petroleum Corporation (CPC) trade unions are all out to protect the CPC market share in the duopoly petroleum market in the country. The Unions are ready to launch trade union action to pressurise the authorities to retrieve the 107 sheds that are now under the treasury.

Secretary, CPC Common Service Union, D. J. Rajakaruna said that for a long period of time the unions have been demanding to hand over these 107 sheds to the CPC but the authorities have not responded so far.

Today these sheds are managed by the CPC but are owned by the Treasury. Earlier the government had planned to sell these filling stations to a third player.

Rajakaruna said that the authorities have not realised the adverse impact on the CPC and the country as a whole if the Lanka Indian Oil Company (LIOC) captures a bigger share in the market. Recently the government decided to give a licence to open 300 new sheds. After we protested against the arbitrary decision a study was done to decide on the number of new sheds to be opened.

The University of Moratuwa technically supported this study and recommended that 167 sheds can be opened according to the present market trends.

Of them, the authorities decided to give 121 sheds to LIOC and 46 to the CPC. After our protests the authorities put this on hold, but a new formula has been drawn up to combine the 107 sheds held by the treasury to give more filling stations to the LIOC, Rajakaruna said.

He said that since the LIOC data is not published it is difficult to calculate the market share of the two companies. However, according to Central Bank reports LIOC supplies 40% petrol and 25-30% diesel.

For the CPC to sustain it needs a minimum 60% market share. Because the Sapugaskanda Refinery produces 60% of the local fuel demand and the LIOC does not buy these products. Today the CPC depends totally on the profits generated by the refinery and reducing the market share below 60% would be the end of the CPC, he said.

This would create serious repercussions. Today the Ceylon Electricity Board, Railway, CTB and the Security Forces obtain CPC fuel on credit.

The Three Forces alone today account for around Rs. 6 billion debt to the CPC. Can anybody expect this kind of credit facilities from the LIOC?, Rajakaruna asked. The Trade unions also said that the fuel price increase in the local market last August was a bonanza for the LIOC.

The fuel price was increased to offset the losses of the CEB. However, the LIOC too permits price increases but it does not provide fuel to the CEB.

In this situation the LIOC earns a huge profit while the CPC is running at a loss. According to the price formula the excess profit of the LIOC in August on petrol was Rs. 9.50 per litre and in September it was Rs. 16.50 per litre. This unfair competition poses a great risk to the CPC, Rajakaruna said.

However, LIOC Managing Director, K. Ramakrishnan denied these allegations and said that in the past two months LIOC was selling petrol and diesel at a loss of Rs. 5 and 15 per litre, because the import price is very high and volatile. We make profits in certain months and in some months it is a loss. However, nobody compensates our losses, he said.

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