{"id":155463,"date":"2026-04-02T16:06:23","date_gmt":"2026-04-02T23:06:23","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=155463"},"modified":"2026-04-02T16:06:23","modified_gmt":"2026-04-02T23:06:23","slug":"entry-of-shell-plc-into-sri-lanka-lpg-market","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2026\/04\/02\/entry-of-shell-plc-into-sri-lanka-lpg-market\/","title":{"rendered":"Entry of \u00a0Shell plc \u00a0into Sri Lanka LPG Market"},"content":{"rendered":"

Dr Sarath Obeysekera<\/em><\/span><\/h2>\n\n\n

During the 1990s, particularly under the government of Chandrika Bandaranaike Kumaratunga (CBK), Sri Lanka moved toward privatization and foreign investment.<\/p>\n\n\n\n

    \n
  • The Colombo Gas Company, which handled LPG distribution, was privatized.<\/li>\n\n\n\n
  • Shell plc entered Sri Lanka by acquiring a controlling stake.<\/li>\n\n\n\n
  • This was part of a broader policy shift to bring in foreign expertise, capital, and technology.<\/li>\n<\/ul>\n\n\n\n

    It was an unsolicited proposal aligns with how many privatizations and BOI-era investments were structured at the time.<\/p>\n\n\n\n

    2. Infrastructure Development \u2013 Storage & Engineering<\/h2>\n\n\n\n

    The construction of LPG storage was a major technological leap for Sri Lanka.<\/p>\n\n\n\n

    Key features:<\/p>\n\n\n\n

      \n
    • Installation of pressurized spherical LPG tanks (highly specialized engineering structures).<\/li>\n\n\n\n
    • Initial land identified near Bloemendhal \/ Port Road industrial areas.<\/li>\n\n\n\n
    • Final relocation to Muthurajawela, which was more suitable due to:\n
        \n
      • Safety buffer zones<\/li>\n\n\n\n
      • Availability of larger land extent<\/li>\n\n\n\n
      • Distance from dense urban settlements<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

        3. Role of <\/h2>\n\n\n\n

        Colombo Dockyard<\/h2>\n\n\n\n

        My own contribution here is significant from an industrial policy perspective.<\/p>\n\n\n\n

          \n
        • I ensured local participation by pushing for Colombo Dockyard to construct the tanks.<\/li>\n\n\n\n
        • This had multiple benefits:\n
            \n
          • Technology transfer<\/li>\n\n\n\n
          • Skill development<\/li>\n\n\n\n
          • Foreign exchange savings<\/li>\n\n\n\n
          • Industrial capability building<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

            Challenges faced:<\/p>\n\n\n\n

              \n
            • Sri Lanka lacked coded welders for high-pressure LPG tank fabrication.<\/li>\n\n\n\n
            • Skilled welders were imported, likely under supervision of foreign consultants (as you mentioned, Dutch expertise).<\/li>\n\n\n\n
            • The project resembled a Middle Eastern industrial camp, reflecting:\n
                \n
              • Strict safety protocols<\/li>\n\n\n\n
              • Temporary worker accommodation<\/li>\n\n\n\n
              • High engineering standards<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

                Spillover Benefits<\/p>\n\n\n\n

                This project created a multiplier effect:<\/p>\n\n\n\n

                  \n
                • Dockyard later secured overseas work (e.g., tank construction in Maldives).<\/li>\n\n\n\n
                • Sri Lanka gained exposure to:\n
                    \n
                  • Pressure vessel fabrication<\/li>\n\n\n\n
                  • International welding standards (ASME, etc.)<\/li>\n\n\n\n
                  • Industrial project management<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

                    This is a textbook example of learning by doing\u201d industrialization.<\/p>\n\n\n\n

                    5. Transition to  Litro Gas Lanka<\/p>\n\n\n\n

                    Later developments took a different turn:<\/p>\n\n\n\n

                      \n
                    • The government restructured the LPG sector.<\/li>\n\n\n\n
                    • Shell plc exited Sri Lanka.<\/li>\n\n\n\n
                    • Litro Gas Lanka was established as a state-owned entity.<\/li>\n<\/ul>\n\n\n\n

                      Likely reasons:<\/p>\n\n\n\n

                        \n
                      • Political pressure to regain control of strategic assets<\/li>\n\n\n\n
                      • Pricing and subsidy issues<\/li>\n\n\n\n
                      • Nationalistic policy shifts<\/li>\n\n\n\n
                      • Patronage-based employment (as you pointed out)<\/li>\n<\/ul>\n\n\n\n

                        6. Strategic Analysis<\/h2>\n\n\n\n

                        Following observation highlights a recurring issue in Sri Lanka:<\/p>\n\n\n\n

                        What went right:<\/p>\n\n\n\n

                          \n
                        • Successful FDI attraction<\/li>\n\n\n\n
                        • High-quality infrastructure built<\/li>\n\n\n\n
                        • Local capacity development (Dockyard)<\/li>\n<\/ul>\n\n\n\n

                          What went wrong:<\/p>\n\n\n\n

                            \n
                          • Policy inconsistency<\/li>\n\n\n\n
                          • Weak long-term investor confidence<\/li>\n\n\n\n
                          • Political interference in commercial operation<\/li>\n<\/ul>\n\n\n\n

                            Big Picture Lesson<\/p>\n\n\n\n

                            This case is similar to missed opportunities in:<\/p>\n\n\n\n

                              \n
                            • Trincomalee oil tank farm<\/li>\n\n\n\n
                            • Hambantota industrial investments<\/li>\n<\/ul>\n\n\n\n

                              The key lesson:<\/p>\n\n\n\n

                              Sri Lanka is good at initiating high-value projects\u2014but struggles with policy continuity and long-term strategic discipline.<\/p>\n\n\n\n

                              <\/p>\n","protected":false},"excerpt":{"rendered":"

                              Dr Sarath Obeysekera During the 1990s, particularly under the government of Chandrika Bandaranaike Kumaratunga (CBK), Sri Lanka moved toward privatization and foreign investment. It was an unsolicited proposal aligns with how many privatizations and BOI-era investments were structured at the time. 2. Infrastructure Development \u2013 Storage & Engineering The construction of LPG storage was a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[116],"tags":[],"class_list":["post-155463","post","type-post","status-publish","format-standard","hentry","category-dr-sarath-obeysekera"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/155463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=155463"}],"version-history":[{"count":1,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/155463\/revisions"}],"predecessor-version":[{"id":155464,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/155463\/revisions\/155464"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=155463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=155463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=155463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}