Busy time for Chevron in Sri Lanka
Chevron Lubricants Lanka has got 2012 off to an interesting, and generally positive, start.
The regional division of the US-lubricants producer firstly announced record results for 2012, with net profits reaching Rs2bn ($15m), an increase of 30% on the previous year. The company credited strong marketing and a focus on managing costs as the primary reasons for the success. There was also a boost from the Sri Lankan government which reduced corporation tax from 35% to 28% during the financial year.
Despite the global rise in base oils the company managed to remain focused and avoided erosion of its margins. However, Sri Lanka's volatile economy, including a depreciation of the Rupee at the start of 2012, could put a dent in the company's aspirations for this year.
The company also faces other challenges - both political and physical - in the coming months. Chevron Lubricants Lanka's CEO, Desamanya Dr Kishu Gomes, recently accused the government of subjecting the company to unfair competition by failing to introduce a long-awaited Petroleum Industry Act.
The legislation would allow the country's Public Utilities Commission to regulate the market rather than the Ministry of Petroleum which, according to the Chevron boss, has a conflict of interest in its management of the state-owned Ceylon Petroleum Corporation (CPC), thus creating an "uneven playing field for the industry."
Chevron Lanka also has the task of finding a new site for its blending and packing plant as the lease comes to an end on the site currently leased from, ironically, CPC. Rather than renew the lease, Chevron has decided to relocate in order to allow for its continued growth. According to the company it already has "several properties identified" for the move.