Sinopec Can Sell Fuel Oil below the MRP value set by the Ministry, No Obstacle from the Government!

To secure the country's fuel supply issues, the government of Sri Lanka expanded the opportunity for foreign companies to bid to enter the local market. As a result, three companies were selected. Among them, Sinopec, a leading international petroleum company headquartered in China, became the first to sign an agreement with the Sri Lankan government and is set to commence fuel sales operations next month after BOI also signed an agreement with Sinopec to operate and set up fuel stations for distribution in Sri Lanka.

With new players entering the fuel sales operations, which were monopolized by Petroleum Corporation (CPC) and Lanka Indian Oil Company (LIOC), speculation has arisen, supported even by reports from mainstream newspapers, suggesting that Sinopec may have approached CEYPETCO with a request to sell oil at lower prices. However, CEYPETCO has still been silent over their request. Our investigation delves into these claims, aiming to provide a comprehensive understanding of the situation.

Media/Social Media Posts

Some Sinhala language newspapers in Sri Lanka reported that Sinopec requested permission from CEYPETCO to sell the petroleum at lower prices in the local market.

Subsequent to such reports, certain social media posts criticized CEYPETCO for not allowing Sinopec to sell petroleum oil for lower prices, as seen below.

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We decided to do a fact-check on these claims.

Fact Check

First, we looked at the response of CEYPETCO to these viral claims. In an official statement, CEYPETCO stated that Sinopec did not request any permission from the company to sell fuel at a reduced price. Furthermore, CEYPETCO clarified that it lacks the authority to regulate fuel oil prices within the market and that the responsibility for regulating oil prices lies in a collaborative effort between the Finance Ministry and the Ministry of Power and Energy, as seen here.

We contacted a representative from Sinopec Fuel Oil Lanka (Pvt) Ltd.’s Hambantota office also to get further insights on this matter, and he admitted that Sinopec had indeed expressed its interest in selling fuel at a reduced price. However, the said request was made by the relevant government ministries. The representative emphasized that Sinopec did not specifically request permission from CEYPETCO in this regard.

To get more clarity on this matter, we contacted the Minister of Power and Energy, Kanchana Wijesekara, who clarified that not only new companies entering the fuel market, like Sinopec but also the existing companies of LIOC or CEYPETCO can sell fuel oil below the maximum price set by the ministry each month, without requiring explicit permission. However, he emphasized that no entity is allowed to sell fuel oil above the MRP value monthly set by the ministry.

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Conclusion

In conclusion, both the companies concerned state that Sinopec did not seek any permission from CEYPETCO to sell petroleum oil at lower prices. Instead, Sinopec has informed the relevant government bodies of its intention to offer oil at a lower selling price than competitors in the market. Minister of Power and Energy Kanchana Wijesekara confirms that no explicit permission is required to sell fuel oil below the MRP value set by the ministry each month; however, companies are not allowed to sell fuel above the MRP value.