Transparent mechanism to regulate petroleum industry gets Cabinet nod

The Cabinet nod has been received to establish an independent and transparent mechanism to regulate the country’s petroleum industry under the Ministry of Energy and Sri Lanka Public Utilities Commission (PUCSL).

PUCSL acts as the designated regulator for petroleum industry, and as the shadow regulator for the lubricant market in Sri Lanka. However, the role of the agency is limited to advising and assisting the Ministry on policies and regulation of the lubricant industry, with the subject Ministry retaining overall powers to regulate the petroleum industry. 

On Monday, Energy Minister Udaya Gammanpila sought the approval of the Cabinet of Ministers to implement the ‘Declaration of Consumer Rights and Responsibilities’ and the ‘Complaint Handling and Dispute Resolution Procedure,’ and to enter in to a MOUs with PUCSL, Sri Lanka Customs, Consumer Services Authority, Sri Lanka Police, Sri Lanka Standards and other relevant government agencies to implement the proposed mechanism. 

According to the Government Information Department, the proposed independent and transparent mechanism will be made responsible for receiving and resolving consumer complaints under the supervision of the Energy Ministry and PUCSL.

Although State-owned Ceylon Petroleum Corporation had a monopoly for all the activities in relation to petroleum industry initially, the industry saw gradual liberalisation since 1994, particularly in lubricant and bunker fuel segments.

Industry experts have been calling for a legal and regulatory framework that provides for fair and non-discriminatory competition, and that would also protect the interests of the consumers by regulating the prices as well as quality of products and services.

The Government Information Department pointed out that no practical mechanism has been established to protect the rights of petroleum consumers, while the role of PUCSL is limited to advising and assisting the Ministry of Energy on policies and regulation concerning the lubricant industry.

Further, the government’s national policy on Natural Gas has proposed PUCSL to be appointed as the mid and down-stream gas market regulator ahead of LNG imports to the country and the possible extraction of petroleum including natural gas following on-going exploration activities. 

Earlier this year, Cabinet approval was granted to draft a new Fossil Fuel Resource Development Act replacing the Fossil Fuel Resources Act No 26 of 2003 in order to establish a new legal framework for local fossil fuels including the natural gas industry.