Sri Lanka’s decision to award a long-term diesel procurement contract to Singapore-based Vitol Asia has brought renewed attention to the company’s controversial history in the country, raising questions over whether lessons from previous fuel-quality disputes have been fully incorporated into today’s procurement safeguards.
Cabinet has approved the award after the Ceylon Petroleum Corporation (CPC) invited bids from registered international suppliers for Petrol 92 Unl, Murban-type crude oil and diesel containing 0.05 percent sulphur.
Aditya Birla Global Trading (Singapore) Pte Ltd was selected for two contracts. It will supply 1.2 million barrels, with a tolerance of plus or minus five percent, of Petrol 92 Unl for a six-month period from September 1, 2026 to February 28, 2027.
The same company was also selected to supply 2.8 million barrels, plus or minus five percent, of Murban crude oil for four months from November 1, 2026 to February 28, 2027.
Vitol Asia Pte Ltd was selected from six bids received for the supply of 1.12 million barrels, plus or minus five percent, of diesel with a maximum sulphur specification of 0.05 percent. The contract period is stated as September 1, 2026 to February 28, 2027.
The latest decision is significant because Vitol has previously been at the centre of serious fuel-quality disputes in Sri Lanka.
In 2009, Vitol supplied a shipment of high-sulphur furnace oil that was alleged to have been contaminated with waste lubricants. The fuel was blamed for machinery problems at state power plants, leading the CPC to blacklist the company.
Vitol was subsequently reinstated after a payment described as a US$150,000 goodwill settlement. The decision generated political controversy and allegations surrounding the procurement process.
Another major dispute emerged in 2011 involving a shipment of diesel. The fuel was alleged to have caused damage to buses, railway locomotives, port equipment and private vehicles. Vitol disputed responsibility and denied that it had supplied defective fuel.
The company was again removed from the CPC’s approved supplier list in 2012. Vitol subsequently challenged the Government and sought US$2.5 million in damages.
However, the dispute did not result in a definitive finding establishing that Vitol’s fuel was responsible for all the reported damage. Following the failure to establish a conclusive chemical link, the Government eventually lifted the ban in 2013.
The historical record therefore does not establish that Vitol’s current supply is defective or that the company should automatically have been excluded from the latest tender.
But it does make quality assurance a critical issue.
With billions of rupees potentially tied to fuel imports, Sri Lanka must ensure that every shipment is independently tested, transparently documented and subjected to strict contractual quality controls.
The latest award may have been made through competitive procurement. The real test, however, will be whether the safeguards surrounding the contract are strong enough to prevent another fuel-quality controversy from becoming another national crisis.