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by Shiromi Moragoda

An interview with Deputy General Manager(Planning and Development) of Ceylon Petroleum Corporation, Ranjith Wickramasinghe on the contribution of the Ceylon Petroleum Corporation towards the 100-day program of the Government.

Question: What is the contribution of the Ceylon Petroleum Corporation, who upto now held the monopoly of importing and distributing petroleum products, towards the 100-day program of the Government?

Answer: With the objective of providing relief to the public we decided to upgrade the standard and expand the distribution of our products from 15th January. In the first phase, '95 octane' the unleaded petrol marketed by the CPC was available only at a limited number of filling stations in and around Colombo. During the first 50 days of the 100-day program we have expended the sales outlets by about 20 enabling consumers to have supply points for this products throughout the country. We had received many complaints earlier on the unavailability of this product in the outstations. This product is especially used for modern vehicles with high performance engines. We are prepared to achieve all our goals set out for the 100-day program.

Q: Is there any changes in the position held by the Corporation with regard to marketing unleaded petrol during this period?

Answer: '90 octane' unleaded petrol will be available from all filling stations with the completion of the 100-day program and thereby we will be able to minimise the harm caused to the environment as well as to small children. The Corporation will have to bear the additional costs involved.

The CPC had envisaged to market unleaded petrol only in the year 2003. However, with the 100-day program in force, we will not import lead additives (Tel Tetra Ethyl Lead (TEL)) but market '90 octane' lead petrol only until such time the lead additives (TEL) in storage are over.

Accordingly, blending of lead additives in petrol will be completely discontinued from the end of March, 2002 and it has been planned to market only '90 octane' unleaded petrol from mid 2002 instead of '90 octane' leaded petrol presently marketed.

Q: We hear much grumbling from the consumers regarding the standard of diesel. What changes do you intend to make to upgrade the standard of this product during the 100-day program?

A: The Sulphur content is minimal in super diesel. It counts only 0.5% at present. We intend to further reduce the Sulphur content to 0.25% during the 1st 100 days. We have already taken steps to reduce the Sulphur content to 0.3% during the first 50 days. Our aim is to reduce this amount to 0.25% during the 100 day program.

Further, due to diesel was marketed so far with a Sulphur content of 1% (maximum). Our aim is to reduce this amount to 0.8% during this period, but our final goal is to reduce the Sulphur content to 0.5%. A quantum of the diesel requirement is produced at our Sapugaskanda Oil Refinery. The planned modifications to the Refinery is expected to be commenced in January and completed by February 2003. With the modification of the Refinery, the Corporation will be able to produce diesel with a Sulphur content of less than 0.5%.

Production will commence in February or March 2003. The delay is due to the Refinery shut down for repairs and maintenance work which is expected to be carried out in January 2003. It is scheduled to produce 2000 m.t. of diesel at the Refinery and the Sulphur content in the diesel so produced will also be brought down to 0.5%. The Sulphur content in the diesel produced at the Refinery at present is about 0.8%. The Sulphur content in the imported diesel is also around 0.8% to 1%. The Corporation has taken steps to retain the Sulphur content at about 0.6% in the diesel imported from last month. During the 100-day program we intend to market diesel with a Sulphur content of less than 0.8%.

The Corporation will be in a position to market diesel with a Sulphur content of 0.5% in the future. Our final goal in respect of the standard of diesel can only be achieved once the modifications to the Refinery is completed.

Q: Increases in the price of fuel is also a major factor for the escalation of the cost of living. Has any changes taken place with regard to the pricing policy of the Corporation products?

A:The price factor is also a very important matter to the consumer just as much as the standard of the product. An automatic price adjustment mechanism reflecting international petroleum prices has been introduced. The price fluctuations will be based on Singapore oil prices. 'PLATTS' price index used in Singapore will be the basis for this. The same rules will govern the pricing policy have too. Taxes and freight changes will also be included.

Accordingly, the price gap will be adjusted taking into consideration the price which prevailed in the previous month and the rate of the US dollar. This formula enabled us to reduce the price of diesel by .50 cents last month. A fixed price cannot be maintained in the future. As the pricing of products will be based on the above formula, the prices cannot be determined by the treasury alone. The public will directly benefit from any reduction in the world oil prices.

As the corporation is compelled to import 65% of the diesel requirement, the world oil prices bears a direct impact on the prices in our country. Although the Refinery produces 2000 m.t. of diesel, the production capacity of the refinery is insufficient to meet the demand. Sri Lanka strongly felt the impact of the world oil price hike in the year 2000 due to this fact.

Although a price increase in petroleum products were recommended at the time, it did not materialize due to election fever which prevailed then. The corporation incurred a loss of Rs. 16.5 billion. It is our belief that the CPC will not face the same experience once again. We should emphasise the fact that while any benefits gained should be passed over to the consumers, it is also vital that this organisation too is kept afloat.

Q: The liberalization of the oil industry is one of the main budget proposals, thus ending the monopoly of the CPC. What relief will the general public gain by this proposal?

Can you also comment on the allegation that, "there is speculation to sell the Ceylon Petroleum Corporation for almost nothing?"

A: The policy of the Government is to increase the productivity through competitiveness among organisations. Accordingly, no one will hold the monopoly. Everybody concerned hopes to earn more profits by the least means. Following this theory, the corporation will also enter as a competitor and also act as the price monitor. In the event an organisation increases the oil prices, the corporation can interfere on behalf of the consumer. Other than that, the corporation will not be fully privatised.

You may remember that the Shell Company held the monopoly on LP Gas due to the Gas Company being sold to the Shell Company. If the corporation had owned any shares at the time, the price of gas could have been controlled. Once the deficit of the CPC has been recovered, the CPC will take action to pass on the benefits of the profits to the consumers.

Q: The allegation that the excess staff has also caused losses to the corporation is subjected to dispute. Is there any truth in this allegation? What will be the fate of the excess staff?

Yes, it has been estimated that the corporation is over-staffed by about 2000 employees. The corporation envisages to introduce a package for their voluntary retirement. A number more than expected may take advantage of this opportunity. At the moment, the NIBM is conducting a survey to determine the staff necessary to the CPC and prepare a cadre to suit the corporation.

Once it is completed the corporation will recruit only those possessing the required qualifications. We have already provided the necessary information to the Public Enterprises Reform Commission (PERC) who is handling this work. All reform work is expected to be completed during the course of this year.

The corporation expects to further improve the services rendered to the public by doing away with the monopoly.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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