The petrol strike

Last week’s previously announced strike by employees of the Ceylon Petroleum Corporation (CPC) would surely have invoked memories of last year’s queue horrors outside filling stations and gas dealerships; this was not only in the minds of motorists and cooking gas consumers but also within a wider spectrum of the people subject to hours long power cuts. The success, if it may be so described, of the Ranil Wickremesinghe presidency up to now predates last month’s deal with the IMF. His government, no doubt because the country had stopped paying off its foreign debt and servicing loan obligations, was able to end the never-before-seen scenes of miles long queues countrywide. If it had been unable to do that, Wickremesinghe would have been past tense by now.

But all is not on the plus side of the ledger. Although the queues near filling stations were largely absent despite the CPC employees’ trade union action, there were shortages attributed to the non-placing of orders by dealers who anticipated a downward price revision in April. That was to be expected in the context of Power and Energy Minister Kanchana Wijesekera’s announcement to that effect. This was undoubtedly wrong speech on the part of the minister who projects an attractive picture in today’s political firmament. He is young, vigorous and speaks very fluent English and Sinhala. He minimizes appearances at press conferences often preferring to have his say through his twitter handle. His early announcement cost plenty.

At the height of last year’s fuel crisis when overnight waits in a queue was common, he introduced the eminently sensible fuel rationing system using a QR code. It may perhaps be argued that this arrangement could have been made earlier than it actually was. But better late than never. Undoubtedly there are some bucks being made by fuel pump attendants now fiddling the system in collusion with dishonest motorists; yet the scheme is working reasonably well and Wijesekera needs to be credited for that. Clearly the public is at odds with strikers causing them both massive inconvenience and hardship by work stoppages. This is most dramatic in the health sector beset with other problems, notably the shortage of essential medicines.

How far the standoff will go on now that the first shots have been fired remains to be seen. The minister has not ordered peremptory dismissal of strikers defying the Essential Service order now in force. Instead he has opted sending the union leaders, including one from his own Sri Lanka Podu Jana Peramuna (SLPP), on compulsory leave. They will also not be permitted within CPC premises. Further action will follow due investigation. The cat is among the canaries with a Samagi Jana Peramuna (SJB) unionist, previously of the UNP, in the prohibited list. Nobody would object to the presence of troops and police within CPC installations as it is a common union practice to intimidate so-called blacklegs.

As this is being written on Friday, fuel distribution appeared normal with both CPC and LIOC (Lanka Indian Oil Corporation) filling stations operating without let or hindrance. Small queues were visible at some sheds on Thursday but these were not more than 10 -15 vehicles long and were quickly cleared. Notices declaring ‘No stocks’ that were ubiquitous the last time round were conspicuously absent. Some tankers on their delivery runs were escorted obviously for the sake of prudence although they were clearly not under threat.

President Wickremesinghe has not even hinted at the possibility of a July 1980-style heavy handed approach used by the JRJ regime of that time fresh from its 1977 landslide. Tens of thousands of strikers lost their job on that occasion and political parties, encouraging unions aligned to them to back a putsch against a government elected with an unprecedented mandate, learned a bitter lesson. Wickremesinghe’s opponents are vocal about his capacity to emulate his Uncle Dickie. He first entered parliament in 1977 and was a favoured nephew of the then president.

The government has explained the decision to bring three new players into the petroleum business was intended to create competition that would benefit consumers. When Prime Minister Sirima Bandaranaike nationalized the petroleum import and distribution business in the early sixties, there were three foreign players in the market selling under the brand names of Shell, Caltex and Esso with Shell dominating marketshare. But at that time all three western players in a profitable business priced their petrol at the same rate and there was no price competition. While there was claimed competition on the service front (eg. one player would wipe a motorist’s windshield with a damp cloth while his tank was being filled) there was no real competition. Today CPC and LIOC usually price their products at the same level but there have been aberrations when LIOC found it was profitable to sell diesel above the CPC price to discourage sales.

One argument for nationalizing the petroleum industry in the early sixties was the possibility of procuring Russian oil. The entrenched players had their own suppliers connected to the western oil industry and procurement from the Soviet bloc was non-existent. Eventually the CPC was vested with a monopoly which continued till 2003 when Colombo introduced limited competition by allowing India’s state-owned Indian Oil Corporation to enter the market. Lanka Indian Oil Corporation PLC, (LIOC) which is quoted on the Colombo Stock Exchange will expand its footprint here with the entry of the new players. CPC employees, many holding sinecures and often recruited with political patronage, naturally resent the shrinking of the CPC monopoly and will resist it. That appears to be today’s state of play.