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Sri Lanka's Petroleum Industries Minister, Susil Premjayantha, has said that Ceylon Petroleum Corporation (CPC/Ceypetco) will soon re-enter the bunker market.

Speaking yesterday, Premjayantha said that he had instructed Ministry Secretary H.T.M. Jayawardana to examine the bunker market with a view to state-owned CPC re-entering the marine fuels business after a lapse of eight years.

CPC previously dominated the Sri Lanka bunker market through its subsidiary Lanka Marine Services (Pvt.) Ltd. (LMS), but the business was sold to John Keells Holdings in 2002.

The Sri Lankan bunker market has become more competitive since LMS was ordered by the Supreme Court to vacate the tank farm it occupied in Colombo in September 2008. The Supreme Court decided there had been serious irregularities in the manner in which LMS had been privatized by John Keells Holdings Ltd and ordered the company to pay back taxes and give up the land it used for refuelling ships.

Since the ruling, the tank farm has been used a number of licensed bunker firms in Colombo with LMS, Lanka IOC and Lanka Maritime Services, a unit of Sri Lanka Shipping, said to have the largest market share.

According to Premjayantha, 50,975 metric tonnes of marine gas oil (MGO) worth US$38.7 million and 178, 908 metric tonnes of fuel oil worth US$178 million had been sold over a 12-month period.

Jayawardana said a feasibility report regarding market entry would be submitted in a month as the government was keen to re-enter the bunkering business as early as possible.

“All indications are for the CPC to be in the bunkering business by the first quarter of next year,” Mr Jayawardene said.

Premjayantha said that CPC was also planning to build a tanker farm at Hambantota's new port, named Ruhunu Magampura Mahinda Rajapaksa port.

Commenting on the previous decision to privatize LMS in 2002, Premjayantha said: “I do not understand why the bunkering business, which was the most lucrative business of the CPC was privatized in the first place when the CPC is running at a loss. I expect that CPC will be able to bring down its losses to a great extent if it re-enters the bunkering business which is worth nearly Rs. 20 billion annually,” the minister said.