Sri Lanka’s Top Chamber Embraces Petroleum Sector Liberalization and Economic Reforms

Given the complexities inherent in reforms and changing processes, we advise the government to set in place transparent processes and governance structures that will facilitate the divestiture of non-strategic commercial assets/stakes, as well as encourage investment in strategic assets such as the Hambantota oil refinery.

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Filling station managed by Ceypectco in Colombo [ Photo: Kavee Nirmal]

The Ceylon Chamber notes with satisfaction the steps taken to implement crucial economic reforms. It is important to maintain the reform momentum under the IMF program, in order to meet the program requirements, as well as implement structural reforms that will ensure sustainable revival.

The Chamber appreciates the steps taken by policymakers in the Power and Energy sector. It is encouraging to note that competition is being introduced to the petroleum sector which was previously dominated by the State. Opening the retail distribution business to three additional players will allow for competition, an increase in quality of service, and for outlets to be set up in remote areas of the country. New players being able to import and supply fuel to the country will also reduce the over-reliance on the CPC to procure dollars and distribute fuel, thereby reducing the vulnerabilities faced in 2022 due to a shortage of dollars in the banking system.

The Chamber hails the statement made by the President at the recent ‘Economic Dialogue – IMF and Beyond’ Forum organized by CA Sri Lanka, which refers to the two E’s in the country – the ethnic issue and the economic issue – and the importance of addressing both these issues in order to achieve real progress.  The Chamber recognizes these as fundamental anchors for the future direction of the country. The recognition of the nexus between reconciliation and ethnic harmony, and economic reform, is vital. The Chamber supports this initiative and will strive to initiate programs at a business level that will complement this agenda.

The recent media reports regarding the EOI responses towards the Hambantota Refinery should be analyzed with caution. Any process which lacks governance and transparency could lead to corruption which is an issue that has hindered the progress of economic development and attracting genuine foreign direct investments. Given the complexities inherent in reforms and changing processes, we advise the government to set in place transparent processes and governance structures that will facilitate the divestiture of non-strategic commercial assets/stakes, as well as encourage investment in strategic assets such as the Hambantota oil refinery. This would also complement the IMF’s engagement with the Government which is aimed at improving the governance framework through a diagnostic analysis, which is a structural benchmark under the Extended Fund Facility with the IMF.

The Ceylon Chamber of Commerce stands ready to assist the government in driving a progressive reform agenda and recognizes that the Private Sector is an equal partner in ensuring an accelerated economic recovery.

SLG Syndication

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