Chevron Lubricants Lanka perturbed by move to grant licences for nine new lubricant players

By Nishel Fernando
Chevron Lubricants Lanka PLC, Sri Lanka’s lubricant market leader, is perturbed by the government’s move to grant licences to nine new players to enter the country’s lubricants industry, increasing the number to 22.Last year, the Energy Ministry issued licences to nine new players under the third round of liberalisation of the country’s lubricants industry, after launching the initiative three years back.

“This is a rather unusual move, as the market has been in a flat to declining trend over the previous four years,” Chevron Lubricants Lanka CEO/MD Muhammad Najam Shamsuddin told the company’s shareholders in its 2021 annual report.

The lubricant demand is expected to remain under pressure, due to the current economic environment, particularly with the continuation on the embargo on vehicle importation and adverse impacts of high inflation on 
vehicle usage. 

In 2021, Chevron recorded the highest volume level over the past five years, retaining its market share close to 42.48 percent recorded in 2020.

Out of the nine new entrants to the lubricant industry, only two companies, namely Prista Oil Holding EAD and Petronas Lubricants (India) Private Limited, commenced sales operations as of the third quarter of last year, according to the Public Utilities Commission of Sri Lanka (PUCSL). 

The two companies accounted for less than 0.1 share in sales in the second and third quarters of last years.
In addition, GP Global Mag L.L.C, GS Caltex Corporation, Lukoil Marine Lubricants DMCC, Total Oil India Private Limited, Idemitsu Lube India Private Limited and Liqui Moly GMBH were also granted with licences.

Meanwhile, Chevron urged the government to bring in the required legislative framework, empowering the shadow regulator PUCSL, to operate effectively, in particular addressing the industry concerns with regard to adulteration and counterfeit oils.  Although, the Energy Ministry has taken certain initial steps to set up an independent laboratory through the Industrial Technology Institute to test the conformity of lubricants to standards, Chevron noted that it is yet to be operationalised to meet the market’s needs.