Tuesday, 09 July 2024 15:29

Ceylon Petroleum Corporation revenue drops in competition with Sinopec Featured

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In the face of competition with a new Chinese player, the Ceylon Petroleum Corporation (CPC) has been compelled to reduce fuel imports to US$ 648.71 million in the first four months of 2024 compared to $ 828.4 million in the same period of 2023, finance ministry’s latest fiscal position report revealed

Another reason to being down the quantity of fuel was the increase in average import price of crude oil in the global market increased to $ 89 per barrel by the end April 2024 from $77 per barrel in December 2023.

A decrease in import costs, in line with the decline in oil quantities due to the entrance of new players to the market, has resulted in the decline in the cost of sales for CPC by 13.5 percent to Rs. 337.4 billion in the first four months of 2024, compared to Rs. 390.1 billion in the same period of 2023.

Consequently, CPC's turnover also posted a notable decrease of 16.6 percent in the first four months of 2024 to Rs. 389.1 billion, compared to Rs. 466.8 billion in the same period of 2023.

Therefore, the profit of the CPC decreased sharply by 68.7 percent to Rs. 13.6 billion in the first four months of 2024, compared to Rs. 43.4 billion in the same period of 2023 it added. .

Due to the policy reforms implemented in the energy sector including the reintroduction of the pricing formula, CPC was able to continue its profit momentum since 2023 and as a result, the Corporation’s trade and other payables decreased by 15.6 percent to Rs. 153 billion as at end April 2024, compared to Rs. 181.2 billion as at end 2023.

Further, CPC no longer owes any liabilities to BoC and the payable amount to the National Iranian Oil Company was reduced to $ 201 million as at end April 2024, a high official of the ministry disclosed. .

Sinopec Energy Lanka (Pvt) Ltd a subsidiary of Chinese oil and gas enterprise based in Beijing and the Board of Investment of Sri Lanka (BOI) have signed an agreement (Dated 14, July 14, 2023) to operate and set up fuel stations for distribution in Sri Lanka becoming the third player in the local petroleum sector.

Sinopec has invested $100 million in the project, which includes the import, storage, and sales of fuel. The project will involve 150 privately-owned fuel outlets currently operated by the Petroleum Corporation.

Additionally, 50 new fuel stations will also be established. The agreement allows the project to operate for 20 years under the oversight of Sinopec Energy Lanka, in accordance with the Sri Lanka Board of Investment Act No. 17.

 The company has imported 42,561.98 MT of petrol at a cost of $ 52,6 million at at end of September 2023 and its turn over from the sales of this stock of petrol was around Rs.15,24 billion power and energy ministry data shows.

Indian Oil Corporation the second player has invested $62 million for the first phase, and $38 million in the second phase in 2002 22 years ago

Lanka IOC PLC (LIOC) reported higher revenue of Rs.75.1 billion for the three months ended March 2024. The cost of sales rising by 18.9 percent from a year ago to Rs.69.35 billion in the March quarter, the company revealed

The Power and Energy Ministry has formally requested RM Parks, a US-based company entering the nation’s fuel market, to disclose the specifics of its financial sources.

Against this backdrop, questions have surrounded the funding of RM Parks’ venture into Sri Lanka’s fuel market, as an anonymous source has alleged that despite its American roots, RM Parks’ financial lifeline had been traced back to an undisclosed Indian investor, shrouding the venture in mystery.

Sources alleged that RM Parks’ investment of US$110 million into Sri Lanka had been marred by financial turmoil, resulting in delays in supplying fuel to its stations and disrupting operations for local dealers.

The sources further indicated that these difficulties had prompted some dealers to seek reinstatement as Ceylon Petroleum Corporation (CPC) dealers.


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