Sri Lanka - 3.1 Fuel
Fuel Overview
Sri Lanka relies heavily on imported crude oil and refined petroleum products to meet its energy needs. The state-owned Ceylon Petroleum Corporation (CEYPETCO, or CPC) is the dominant company in Sri Lanka's fuel sector, which controls the importation, refining, and distribution of petroleum products. In the private sector, Lanka IOC also imports and distributes petroleum products in the country. The companies operate a network of fuel stations across the country and supply fuel to a range of industries, including transportation, agriculture, and manufacturing. Additionally, in 2023 three foreign firms have been granted authorization to enter Sri Lanka's fuel retail market. These firms include China's Sinopec, Australia's United Petroleum, and RM Parks of the USA, in partnership with multinational oil and gas company Shell plc.
Oil refinery
The Sapugaskanda Refinery is an oil refinery located in Sapugaskanda, a suburb of Colombo. It is the only oil refinery in Sri Lanka and is operated by CEYPETCO.
Currently, the Sapugaskanda Refinery meets approximately 25% of the domestic fuel demand, while the remaining 75% needs to be imported as refined fuel. This heavy reliance on imports places a significant burden on the country's foreign exchange reserves. One of the Ministry of Power and Energy’s major objectives is the production of the local demand for petroleum products in the country by 2026, and for this, feasibility study for this was completed by CEYPETCO in 2021 and the following reports were submitted through the feasibility study, construct a new refinery with a capacity of 100,000 barrels per day on a Build, Operate and Transfer basis, to modernize the existing refinery to increase its capacity to 45,000 barrels per day. After the construction of the new refinery, capability will be available for the local demand for fuels to be fully refined within the country and supplied. It has been estimated that around 08 USD could be saved per barrel by importing crude oil and refining in lieu of importing refined products. Further, opportunity would be available to supply to the local market fuels of high quality by raising the standards of the new refinery to Euro VI or a higher standard. (Annual Performance Report (Energy Section), 2021)
The addition of an oil refinery or distribution hub at Hambantota has been under discussion since at least 2017. In January 2023, Sri Lanka cabinet gave the permission for the Ministry of Power and Energy to call expressions of interest (EOI) to set up an export-oriented oil refinery in Hambantota, and the EOI received seven responses in March.
The 2022 fuel crisis
From early 2022, Sri Lanka experienced a range of difficulties, including power cuts, inflation, and fuel shortages, which triggered widespread protests and disrupted daily life. These challenges stemmed from the country’s insufficient foreign currency reserves, which hindered the CEYPETCO from importing additional fuel. Consequently, essential services were severely affected, and the prices of petrol and diesel skyrocketed. At the height of the fuel crisis, the government had to ban the sale of fuel for non-essential vehicles and imposed severe restrictions on sales. To conserve supplies, schools were closed, and people were urged to work from home.
In light of the economic crisis and fuel scarcity, the Government of Sri Lanka implemented a fuel rationing system known as the “National Fuel Pass”, in an attempt to ensure fair and orderly distribution of fuel by providing a weekly quota to vehicle owners. To obtain fuel, vehicles must register at https://fuelpass.gov.lk/ with the owner’s national identity card (NIC) or passport number and vehicle chassis number, and upon verification of the vehicle identification number and other details, a QR code linked to the owner's National Identity Card (NIC) will be allocated for each vehicle.
Fuel Pricing
The pricing of petroleum products in Sri Lanka is regulated by the government. Sri Lanka purchases petroleum products at Singapore Platts prices. The government sets the maximum retail prices of petroleum products based on the world market prices of crude oil and refined petroleum products. While dominating the Sri Lankan fuel retail market by controlling the importation, refining, and distribution of petroleum products, the state-owned CEYPETCO is responsible for implementing these policies and is exposed to the commodity price risk of petroleum products (both crude and finished products) and other raw materials imported from overseas countries in USD and other currencies. Cost reflective price mechanisms are not in place in deciding domestic retail sales prices of petroleum products in line with international oil price movements. Transport differentials are factored into the outstation spot prices.
The CEYPETCO records Sri Lanka's fuel prices, and the price history is available through the following link: https://ceypetco.gov.lk/historical-prices/
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Fuel Prices per Litre as of: 30 April 2023 (local currency and USD - $) |
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Lanka Petrol 92 Octane |
333.00 |
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Lanka Petrol 95 Octane Euro 4 |
365.00 |
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Lanka Auto Diesel |
310.00 |
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Lanka Super Diesel 4 Star Euro 4 |
330.00 |
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Lanka Kerosene |
295.00 |
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Lanka Industrial Kerosene |
330.00 |
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Lanka Furnace Oil 800 |
320.00 |
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Lanka Furnace Oil 1500 (High) |
320.00 |
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Lanka Furnace Oil 1500 (Low) |
320.00 |
Seasonal Variations
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Seasonal Variations |
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Are there national priorities in the availability of fuel? (i.e. are there restrictions or priorities for the provision of fuel such as to the military?) |
No |
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Is there a rationing system? |
Yes. In July 2022, amidst the peak of the economic crisis and fuel shortage, a fuel rationing scheme known as the “National Fuel Pass” was introduced by the Ministry of Power and Energy in response to the situation. |
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Is fuel to lower income / vulnerable groups subsidized? |
No |
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Can the local industry expand fuel supply to meet humanitarian needs? |
Yes |
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Is it possible for a humanitarian organization to directly contract a reputable supplier / distributor to provide its fuel needs? |
Yes |
Fuel Transportation
Petroleum products are imported into Sri Lanka through Colombo Port. CEYPETCO has a storage facility in Kolonnawa, near Colombo, where imported crude oil and refined products are stored. From there, the CEYPETCO distributes the products to its own retail outlets as well as to independent retailers and private oil companies.
The transportation of fuel from the storage facility to different parts of the country is mainly done through tankers. These tankers are either owned by the CEYPETCO or by private companies. There are also pipelines that transport refined products from the Kolonnawa storage facility to the Kelanitissa Power Station, which is a major consumer of fuel in Sri Lanka.
Standards, Quality and Testing
Testing Laboratories
There are National testing laboratories for testing the quality of the fuel.
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Industry Control Measures |
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Do tanks have adequate protection against water mixing with the fuel? |
Yes |
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Are there filters in the system which monitor where fuel is loaded into aircraft? |
At present fuel information capturing and monitoring is a semi-automated process. The system used to record and monitor fuel is incapable of capturing certain planning and actual fuel data due its design limitations. Also, the current system is incapable of carrying out effective analysis on fuel usage and effective communication to all levels. Implementation of fuel saving initiatives also has become a difficult task due to above limitations in the current system. Incidentally, the fuel monitoring department is finding it difficult to optimize the fuel usage any further. System generated MIS report requirement is a main concern of the management and require dynamic and instant reports which gives an insight to the fuel usage at all levels. |
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Is there adequate epoxy coating of tanks on trucks? |
Tank inside painted with two coats of Hi-Solid Epoxy coatings |
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Is there a presence of suitable firefighting equipment? |
Yes |
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Standards Authority |
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Is there a national or regional standards authority? |
Yes |
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If yes, please identify the appropriate national and/or regional authority. |
Central Environmental Authority |
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If yes, are the standards adequate/properly enforced? |
Yes |
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Testing Laboratories |
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Are there national testing laboratories? |
Yes |
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Fuel Quality Testing Laboratory |
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Company |
Lanka IOC PLC |
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Name |
Lanka IOC PLC terminal |
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Address |
Lanka IOC PLC terminal at China Bay, Trincomalee |
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Telephone and Fax |
026-2 233 286 / 759 278 023 |
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Contact |
Udara Pushpakumara - Chemist |
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Standards Used |
Density; Kinematic Viscosity; Total Base Number; Total Acid Number; Strong Acid Number; Sulphur; Calcium; Phosphorous; Magnesium; Zinc; Barium; Sulphated Ash; Ash; Carbon Residue; Existent Gum; Flash Point – PMCC; Flash Point – COC; Pour Point; Foaming Characteristics; ASTM Color; Rust Test; Emulsion Characteristics; Total Sediments; Water; Distillation; Doctor Test; Water; Cetane index; Calorific Value |
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