Smaller lubricant companies call for level playing field

LUBRICANT INDUSTRY: Some players in the lubricant industry yesterday expressed hope that they will be able to reach a new agreement with Petroleum and Petroleum Resource Development Minister A.H.M Fowzie in order to create a level playing field for all lubricant companies.

The lubricant marketing companies which are members of the Ceylon Motor Traders' Association (CMTA)yesterday told the media that the new agreement should be fair and should ensure that the privileges that warrant a concessionary license fee are incorporated in such an agreement.

Among smaller players in the market which has formed an industry lobby to address the present issue are McLarens Lubricants Ltd, Associated Motorways Ltd, United Motors Ltd., NM Distributors Ltd, and Lanka IOC Ltd. These companies market lubricant brands including Mobil, Esso, Castrol, BP, Valvoline, Shell and Servo.

The smaller players complained that successive governments ignored appeals to establish a level playing field. The issue heated us since Minister Fowzie recently announced that Sri Lanka is to double the licence fee for lubricant sellers and invite more players into the market.

At yesterday's meeting chaired by CMTA President Suren Abeygunasekara it was highlighted that although companies proceeded to obtain a temporary licence for Rs.500,000 by February 11 in order to continue with the business they have written to the Minister that such an action did not construe an agreement but was only an interim measure.

The tariff differential of 13 percent between finished products and locally value added products is disadvantageous to smaller players.

A notable absentee at yesterday's meeting was Caltex Lanka Lubricants Ltd., which dominates the local lubricant market. Caltex is not a member of CMTA.

Meanwhile Caltex Managing Director Kishu Gomas told the Daily News that there is absolutely no truth in saying that the Lubricant playing field is uneven.

"All players including Caltex pay the same duty rate for finished products (28%). We too import some finished products for which we have been paying the same duty since the market liberalisation in 1999," Gomes said.