Petroleum Ministry orders crackdown on errant lubricant players
The Ministry of Petroleum Industries at a recent meeting held with firms in the lubricant sector has come out with some key decisions involving cracking down on illegal operations in the industry, sources said.
Some 11 industry players had met with the Minister of Petroleum Industries, Chandima Weerakkody who had made a decision to halt issuing licences to more entrants. Issuing licences to more entrants was proposed in the last budget.
Mr. Weerakkody had said that it's advisable to keep the players below 15, a source who participated at the meeting told the Business Times.
Unauthorised importation of lubricants was also pointed out by the players who said that there are about 20 such parties engaged in the lubricant market violating the existing procedure. Currently, these parties import and distribute both authorised and unauthorised brands of lubricants which adversely affect the industry, lose revenue to the government and they create a risk to the customers by way of sub-standard products.
When the participants suggested appointing a coordinator to inquire into the complaints of illicit imports of lubricants in the country, the minister advised them to complain to the Police any illegal importation of lubricants.
He instructed to convene a meeting with the Sri Lanka Customs (Customs) and Import Control Department officials to discuss this matter and advise them to strictly comply with the regulations, the source said adding that Mr. Weerakkody requested the market players to write to the Secretary to the Ministry on such illegal activities.
At the meeting, it was observed that there is a market anomaly with respect to synthetic lubricants. Lubricants may be categories under Mineral based ( HS Code: 27) and Synthetic based ( HS Code: 34, but both mineral and synthetic lubricants should come under license.
"Whilst, the licence holders have the exclusivity to import all lubricating oils, the inconsistency relating to import controls has resulted in the import of synthetic lubricants by parties who weren't granted licences to import lubricants. Also, while the licence holders who import all lubricants including synthetic lubricants under HS Code: 27 are levied a Customs Duty over 20 per cent and the non license holders import the synthetic lubricant under HS Code: 34 with a very lower Customs levy. This causes revenue loss to the government," the source said.
To this the minister instructed to take immediate action to bring synthetic lubricants under licence in consultation with the officials of Custom and Import and Export Control Department and the Ministry of Finance.
In terms of product adulteration, that is taking place on a large scale, where sub- standard lubricants cause severe damage to the vehicles and equipment, the Minister had said that complaints will be made to the Police against such illegal operators and to prosecute them as per advice given by the Attorney General.
The market players were encouraged to send the market intelligence information to the Ministry, the source said.
He said that when they pointed out that there is no proper institute or laboratory which is authorised to check the quality standards of imported lubricants, it was proposed by the minister to upgrade the laboratory of Ceylon Petroleum Storage Terminals Ltd enabling them to test the quality standards of imported lubricants.
The participants observed that some parties are engaged in the business of re-cycled lubricants when the minister had said that no one can start the re-cycle oil business in Sri Lanka without the approval of the Ministry."
The Ministry has no intension of granting any approval to any party, he had said.
The minister had also said that there is no circular or any formal instructions given to any government institution to buy only from Ceypteco.
Ceypetco is expected to compete on equal grounds with other players in the market, he had said. When it was pointed out that re- packing of other player's lubricants under home grown brands is an illegal activity that has to be stopped, the minister was of the view that these parties will have to be prosecuted "The market participants were requested to send the information to the Ministry," the source said.
At the meeting, it was observed that there is a market anomaly with respect to synthetic lubricants. Lubricants may be categories under Mineral based (HS Code: 27) and Synthetic based (HS Code: 34, but both mineral and synthetic lubricants should come under license.