July 17 (LBO) – The government has agreed to amend lubricant tariffs, narrowing the gap between lube imports and raw materials like base oil, to spur competition in the sector.
New investors will also be allowed to blend lubricants locally, though the small size of the local lube market is widely expected to support just one more blending plant.
The local lube market estimated at 45,000 kilo litres (283 kilo barrels) and valued at around six billion rupees is growing at 10 percent each year.
Apart from Caltex, the market is split between Lanka IOC with about 13 percent, Servo, Mobil, Valvoline, British Petroleum/Castrol and Shell.
Currently, imported lubricants are taxed at 28 percent, while imports of base oil used to blend lubricants locally are taxed at 15 percent and other additives at 2.5 percent.
In effect, the price difference between imported finished products and raw materials is about 15 percent.
The government took the decision to rationalise the tax structure for lubricants, while recognising local value addition in blending. This decision was approved by Cabinet last week, Mrs. Kanthi Wijetunga, Additional Secretary, Ministry of