The Ceylon Petroleum Corporation has been authorised to open 75 new fuel stations, and Energy Minister Anura Karunathilake says private suppliers are free to set their own prices to cover their costs — but will face legal action if they restrict supply to force a price rise.

The two statements, published on Sunday, are the government’s clearest response yet to the supply restrictions that returned fuel queues to Sri Lanka at the start of the month.

CPC Chairman D.J. Rajakaruna told the Sunday Times that authorisation had been granted for the new stations, to be sited particularly in areas with no CPC-run sheds, and that the number would rise further if needed.

“In areas where only the private companies operate, there are long queues, as these companies have limited the issuing of both petrol and diesel. We will take any measure to stop the people from being inconvenienced,” he said.

Karunathilake, who holds the Energy, Ports and Civil Aviation portfolio, put the rationale in blunter terms: the private operators’ monopoly in the outstations was inconveniencing the public, and it had to be broken by letting CPC stations operate alongside them.

The monopoly is geographic, not national

The Sunday Times publishes the market structure behind that claim. Of 1,440 filling stations island-wide, Ceypetco operates 887 — with Lanka IOC on 273, Sinopec Energy Lanka on 150 and RM Park on 130. Those figures sum to exactly 1,440.

That makes the state corporation the operator of roughly 62% of the country’s stations, while handling over 80% of diesel distribution and supply. The minister is therefore not arguing that private firms dominate the national market. His complaint is about particular towns where they are the only operator — which is why the remedy is new stations in those places rather than a national measure.

”They may raise prices — they have chosen not to”

The minister’s position on pricing, reported by the Daily Mirror, is that private suppliers have the option of pricing fuel on their costs if they choose to. He said some private stations had been limiting distribution and inconveniencing consumers, and warned the government would take legal action if supplies were restricted to pressure the authorities into approving increases.

The government would not yield to “unjustified pressure from multinational companies or fuel distributors,” he said, adding that while it aimed to support investors, protecting consumers and keeping supply uninterrupted remained the priority.

The Sunday Times carries the same argument with the mechanism attached: the companies are permitted under their agreements to raise prices under the fuel pricing formula, but have not used that option, instead holding their prices close to the CPC’s while limiting what they issue.

“They have adequate stocks but are not issuing at the optimum level, which has led to the queues,” the minister said.

Two strands of the government’s position sit awkwardly together. Suppliers are told they may price on cost, yet also told the government will not allow them to “arbitrarily increase prices under pressure.” No filing draws the line between a permitted cost-based increase and an impermissible one.

The Attorney General’s advice has now been sought

On 7 October the minister told Parliament the government would seek legal advice if restrictions continued. The Sunday Times reports that the ministry has now sought the Attorney General’s advice — closing a question this newsroom left open on 6 October.

One ambiguity carries over. The Sunday Times describes the advice as sought within the framework of the agreements and the powers vested in the ministry under the Ceylon Petroleum Corporation Act, while its own second report on the same page names the Petroleum Act. Our earlier coverage flagged the Daily Mirror and NewsFirst naming those same two different statutes. That one newspaper now names both in a single edition suggests both are in play, rather than one outlet having erred.

Update, 11 October: what the Attorney General has been asked

A later NewsFirst filing narrows the question. The government has decided to seek the Attorney General’s advice on the agreements signed with the private fuel companies, and Karunathilake said the advice would focus on what measures could be taken if the companies fail to fulfil their operational obligations, NewsFirst reported.

That is the first indication of the substance of the referral, and it closes part of a question this article left open. It is a question about enforcement under the existing agreements, not about renegotiating or revoking them.

NewsFirst renders the statute as the Petroleum Products Act, recalling the minister’s statement to Parliament that action would be taken under that Act and the powers vested in the Ministry if private suppliers restrict distribution. That is a third rendering alongside the Ceylon Petroleum Corporation Act and the Petroleum Act named by the Sunday Times. This desk does not treat the difference as settled; no filing cites a section number.

The companies are now behaving differently from one another

NewsFirst also reports the first disaggregated account of whether the restriction is easing. According to the minister:

That matters for how the dispute is read. The CPC chairman’s blunt figure — that the private operators are “releasing only 50% of their fuel” — treats the three as acting alike. On the minister’s own account a day later, they are not: one has begun to move and two have not. No filing says why, or whether the difference reflects different stock positions, different loss exposure or different commercial judgements.

A second dispute, and a different account of the cause

A related Sunday Times report sets out a separate quarrel over what it costs to move the fuel. The Ceylon Petroleum Private Tanker Owners’ Association wants transport charges revised to reflect diesel, tyres, batteries, maintenance and wages; its chairman A.M.H. Adhikari puts the necessary increase at about 20%.

A final decision was expected by Monday. Rajakaruna said an agreement had been reached with the bowser owners to study the formula further, with the decision held up because a University of Moratuwa expert committee reviewing it had yet to report.

That report also offers a different cause for the queues than the one previously on record. It states that the dispute over transport charges “triggered off fuel shortages at filling stations earlier this week” — where the reporting of 6–7 October attributed them to the three distributors cutting releases over losses. The two are not mutually exclusive, since bowsers are how fuel physically reaches the pumps, but no filing reconciles them.

Rajakaruna also gave a blunter figure for the restriction than the per-company percentages published last week, saying the private operators are “releasing only 50% of their fuel,” and insisted the situation is not a shortage:

“We arrange for fuel shipments to arrive earlier than scheduled, sometimes by two or three weeks… We also maintain sufficient fuel stocks to meet the country’s requirements for around 20 to 30 days.”

He said there would be no further fuel price increase this month and advised motorists to use the nearest CPC station. Note that on 7 October the same chairman committed to no revision for three months; the Sunday Times reports only the narrower monthly assurance, and does not say whether the longer commitment still stands.

Update, 12 October: the minister says supply is stabilising — and warns against panic buying

Energy Minister Anura Karunathilake said on Monday that there is no impending fuel shortage, and urged the public not to be misled by rumours circulating on social media or to engage in panic buying, the Daily Mirror reported. He was speaking in Colombo at the 37th Annual General Meeting of the Container Transport Owners’ Association.

The substantive new fact is a direction of travel. The minister acknowledged availability problems earlier in the week and said the situation was now stabilising, with several companies resuming fuel distribution to the market.

Read against the Sunday reporting above — where the CPC chairman said the private operators were “releasing only 50% of their fuel” — that is the first statement from the government that the restriction is easing rather than holding. It does not say which companies resumed, by how much, or whether the three distributors named in earlier filings are among them.

He said the Ceylon Petroleum Corporation is prepared to maintain uninterrupted supply, repeated that private companies set their own prices while the CPC supplies at affordable rates, and warned that excessive purchases and stockpiling could aggravate temporary disruptions.

“Excessive fuel purchases and stockpiling could aggravate temporary disruptions in supply,” he said.

The warning against panic buying is itself a continuation rather than a new development: the same message was issued a week earlier, when the queues first returned. What has changed is that the minister is now describing recovery rather than denying a shortage.

Karunathilake also told the transport operators that the government was committed to creating a free, fair and supportive environment for investors and business owners.

Update, 12 October: the companies say the permission is not actionable without a document

The three foreign suppliers say they cannot act on the minister’s statement that they are free to set prices until the Energy Ministry puts a price ceiling to them in writing, the Daily Mirror reported in a filing by Kelum Bandara.

Lanka Indian Oil Company, RM Parks and Sinopec are awaiting formal communication from the ministry before deciding on pricing for their supply in the local market amid world market fluctuations, an informed source told the paper. A source close to the companies said they could act only after a written communication from the ministry setting a ceiling on the price of each petroleum product.

“Then, we can set our prices below the maximum ceiling announced by the Ministry or the Ceylon Petroleum Corporation for that matter,” the source said.

This sharpens the contradiction set out above

The two strands this article flagged as sitting awkwardly together now have a mechanism attached. The minister’s public position is that private suppliers may price on their costs. The companies’ position is that a verbal permission is not operable — they are asking for a document that states a maximum, and say they will price below it.

Read together, the dispute is narrower than a disagreement about whether prices may rise. Both sides describe a ceiling-and-below arrangement. What is missing is the instrument that sets the ceiling. On the companies’ account, the freedom the minister describes cannot be exercised until the ministry issues it; no filing says whether the ministry accepts that characterisation, or regards the existing pricing formula as already supplying the ceiling.

It also sits oddly with the minister’s other line of argument. The government’s complaint is that the companies are permitted to raise prices under the formula and have chosen not to, holding prices near the CPC’s while restricting what they issue. The companies’ answer, on this account, is that they are waiting for a number from the ministry — which would mean the option the government says they are declining to use is one they say they cannot yet use.

The 35% figure measures something different from the 38% above

This filing says the three companies are “collectively responsible for 35 percent of supply in the local market.” The Sunday Times breakdown reported above gives them 553 of 1,440 filling stations — Lanka IOC 273, Sinopec 150, RM Park 130 — or about 38% of stations.

Those two percentages are not in conflict because they do not measure the same thing: one is a share of outlets, the other a share of supply volume. They are close enough to look like the same statistic and should not be used interchangeably. Note too that this article’s own figures have the CPC handling over 80% of diesel distribution, which would leave the three well under a fifth of that product — so a combined 35% of total supply implies their volumes are weighted towards petrol. No filing publishes a product-by-product split.

A note on the minister’s name

This filing renders the Energy Minister as “Aruna Karunatilake”. Our earlier coverage, and the Sunday Times and NewsFirst filings cited above, render him “Anura Karunathilake”. Both are the Daily Mirror’s own paper within two days. This report uses the spelling used across our earlier coverage; the difference is noted rather than resolved.

Not reported

Answered since first publication: whether supply was recovering — the minister says it is stabilising and that several companies have resumed distribution, though no filing quantifies this or names them. Whether the tanker owners’ 20% claim was settled on Monday is still not reported; the minister’s remarks to the Container Transport Owners’ Association do not address it, and no filing says whether the University of Moratuwa expert committee has reported.

No filing gives a timetable for the 75 stations, their locations, what they will cost, or whether they will be newly built or existing sites taken over. None says how a corporation already supplying over 80% of the country’s diesel will staff and stock them.

None of the three companies has responded to the minister’s statement that they may raise prices and have not, and none has answered the charge that stocks are being withheld. Whether the tanker owners’ 20% claim was settled on Monday is not yet reported.

Answered since first publication: what the Attorney General has been asked — the measures available if the companies fail to meet their operational obligations under the agreements. Still open: when an answer is expected, which statute the referral actually proceeds under, and why Lanka IOC has increased distribution while Sinopec and RM Parks have not.

New since 12 October: no filing says whether the Energy Ministry will issue the written price-ceiling communication the three companies say they are waiting for, when it would come, or what the ceiling figures would be. None reports the ministry’s response to the claim that its verbal permission is not actionable — or whether it considers the existing fuel pricing formula to already constitute the ceiling. The companies are not quoted on the record; both accounts come from unnamed sources described as informed or close to the companies.

Sources: Daily Mirror, Sunday Times, Sunday Times (tanker charges), NewsFirst, Daily Mirror — panic buying warning.