Lubricant licence fee should not be lowered

Licence fee: There is absolutely no truth in saying that the Lubricant playing field is uneven Managing Director CEO Caltex, Kishu Gomes said. He says that the license fee should not be lowered, as it would compromise quality.

He said that they welcome new players to the market. "However the new players should make substantial investments and then they would have good returns," he said.

"IOC has been successful in gaining a sizable market share over the last couple of years clearly showing that one has to make marketing investments to achieve marketing success. No business can expect a return in the short term without offering value for money to the customer, particularly in a small market such as Sri Lanka," he said.

There is a duty differential of 13% between finished products and raw materials for local value addition which is a global phenomenon for protection of a country's economy. This has resulted in Indian Oil Corporation and Laughfs Gas Private Limited too deciding to invest in blending plants in Sri Lanka.

An unhealthy duty differential may discourage local investment that will be detrimental to the country's economy.

We believe that the current duty gap is fair and equitable with the duty structure for other important industries. Please refer slide no 6 of the attached presentation for comparison of duty rates for several industries. (SS)