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The world practically runs on petroleum products. We have seen that even the slightest shortage of petroleum products in the market has a major effect on economic activities. The widespread availability of petrochemical products at reasonable rates is good for industry and the public.

This is why the government is keen to liberalise the oil business in the country, which has until recently been tightly controlled by the Ceylon Petroleum Corporation (CPC), a State-controlled monopoly. Individual and corporate consumers were at the mercy of this behemoth which had to raise prices even when oil prices hit rock bottom in the world market, partly as a result of its huge debt burden and excess staff.

Consumers will hope for a change when the Indian Oil Corporation (IOC) enters the lucrative petroleum retail market next month with 100 filling stations. Several more big players in the international petroleum arena have expressed an interest in operating filling stations and other related facilities.

Liberalisation in the oil sector began with the import and sale of lubricants some years back. Now several international companies are marketing their products here at very competitive prices. The same rationale could hold true for the wider petroleum market with the entry of more petrochemical companies and the end of the CPC monopoly.

Another important factor is the sale of marine oil and aviation fuel to ships and aircraft passing through Colombo. High marine and aviation fuel prices in Colombo have driven away some operators to other regional ports such as Singapore. For example, a ton of marine oil costs US$ 340 in Colombo, but only US$ 230 in Singapore.

This is about to change, thanks to the liberalisation of the bunker oil industry. The latest entrant to the bunker fuel business, Lanka Maritime Services, has revealed plans to sell marine oil at under US$ 300 per ton. This is still more costly than Singapore, but much more competitive. The move is certain to attract ships that would otherwise have bypassed Colombo.

It is also necessary to explore Sri Lanka's ocean zone for oil and to develop oil refineries with an eye on exports. Refining more crude oil here will save a huge amount of foreign exchange. Our ports should also be upgraded to handle more ships for cargo operations, oil supplies and repairs. Again, a competitive pricing structure is essential to lure the ships away from competing ports.

Liberalisation, however, is fraught with danger when it is a case of handing over a monopoly to one private company or even to two. Liquid Petroleum Gas is a case in point. Now that there are three LP gas companies in the fray, the consumer can expect a better deal.

The latest competitor has promised LP gas at lower prices and indications are that the other two are ready to follow suit.

The entry of internationally-renowned companies to Sri Lanka's market in the process of liberalisation and privatisation on their own or in partnership with local companies is also an impetus to the country's prospects as an investment destination. The fact that these companies are willing to invest millions of dollars to set up operations here is a measure of their confidence in our economic resurgence and resilience. Their success in the local market is likely to stimulate other big-time companies to invest here.

In this context, it is encouraging to note that more shipping and aviation firms are investing in Sri Lanka which is aspiring to become a regional transport hub. Cheaper fuel will certainly add to this momentum.

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