§ Lady Gammans
asked the Secretary of State for Commonwealth Relations what reply he has made to the request by the Shell Oil Company to make representations on their behalf, as a result of the decision of the Government of Ceylon to exclude them from the domestic oil market.
§ Mr. Sandys
In 1961 the Government of Ceylon set up the Ceylon Petroleum Corporation, a government-controlled body, to import and distribute petroleum products in Ceylon. The British oil com-232W pany (Shell) and two U.S. companies which had until then served that market were permitted to carry on their activities in limited competition with the new Corporation.
On 3rd July, 1963, the Government of Ceylon announced that the internal distribution business throughout the Island was to be exclusively assigned to the Ceylon Petroleum Corporation with effect from 1st January, 1964, notwithstanding any undertakings previously given in regard to the import, sale and distribution of petroleum. Legislation to give effect to this decision was introduced into the Ceylon Parliament on 17th July.
The British Government do not, of course, contest the right of any Government to nationalise undertakings in its territory, but they expect that in that event prompt, adequate and effective compensation in accordance with the principles of international law, will be paid to British interests which may be affected. The Government are disturbed by the Ceylon Government's decision which departs from its policy as hitherto understood. In particular it has not so far paid any compensation for property taken from the Shell Company in 1961. Moreover, the legislation recently introduced apparently precludes the payment of compensation for property which will not be acquired for the Corporation but which will be rendered useless, if the Shell Company is excluded from the internal market in Ceylon.
The British Government have throughout made their views clear to the Ceylon Government and have reiterated them in recent representations of which the Shell Petroleum Company have been informed.