The Ministry of Power and Energy has proposed to remove the Lubricants Tax from the Public Utilities Commission of Sri Lanka (PUCSL), the shadow regulator of the lubricants market without providing proper justification but to parallel the independence of the Commission, president of Public Services. Sri Lanka Commission, said Janaka Ratnayake.
The PUCSL has been regulating the lubricants market since 2006 for 17 years.
“As the PUCSL is funded through a levy to regulate the lubricants market and when the levy is removed, it could result in the regulator not being able to perform its duties effectively and dependent on state funds and political influence . Without an independent fund, the regulator may not be able to carry out its mandate to ensure a sustainable lubricants industry. This could lead to several dangers, including the dominance of non-standard and unauthorized lubricant products (Grey Market) in the market, leading to vehicle and manufacturing equipment failures, accidents and other negative outcomes. Lubricant adulteration has become a major concern in the lubricant market and PUCSL has made impressive progress in eradicating these substandard and unauthorized lubricant products paving the way for qualified lubricant products that , will ultimately benefit consumers,” Rathnayake said.
Sri Lanka’s lubricant market volume is approximately 70,000 kl. (53kl in 2022).
There are 26 licensed players in the market with four batters and 22 importers of finished products.
The recent RFP will expand the market to additional players.
Increase in gray market and increase in duty difference between blenders and importers which has a negative impact on importers to compete with blenders are the major problems faced by Sri lubricants market Lanka.
It is estimated that 30% of the market is satisfied with adulterated and unauthorized lubricants and an estimated 40% to 45% of the grease market is covered by adulterated greases. The total gray volume of the market is estimated at around 28,000 kL and is increasing exponentially year after year.
“Therefore, removing the regulator’s levy on the lubricants market could have serious negative consequences, potentially putting the safety and well-being of consumers at risk. It is important to ensure that regulators have the necessary funding and resources to carry out their duties functions effectively and ensure that products are safe and reliable.” Ratnayake said more.
“Cripling an independent regulatory body like PUCSL for mere political gains would create serious damage not only to the current market but also to the future market and will send a wrong message to the international community about clipping the wings of an independent utility. Therefore, I condemn this move.” added Ratnayake.
Contributing to the industry over the past few years, PUCSL was able to publish a bulletin that made adulteration and illegal imports under the Consumer Authority (CAA) Act to address the absence of legal provisions to target or arrest adulterants of products and illegal importers within the petroleum law. . PUCSL is also in the process of drafting an implementation MOU to provide necessary facilities to facilitate raids on CAA and also bear the cost of disposal of seized lubricants and greases to encourage raids on the adulterated market.
PUCSL has also taken steps to offer the NVQ 03 qualification for 6,000 lubricant technicians to produce technically qualified personnel in the lubricants market in order to raise the technical and safety standards of the industry while plans are being developed to establish a facility · testing of lubricant products.
PUCSL is also currently studying to determine the duty differential and local value addition to provide advice to the government on the optimal duty structure and has already implemented a consumer complaint handling procedure and to resolve consumer and stakeholder disputes of the market
– PUCSL
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