The regulation of the downstream petroleum industry is to be assigned to the Commission under Act, No. 35 of 2002.  Towards this end, the Schedule of Act, No. 35 of 2002 was amended in July 2006 by way of a resolution passed in Parliament to include the Petroleum industry in the list of public utilities to be regulated by the Commission. In addition, the Petroleum Products (Special Provisions) (Amendment) Bill and Ceylon Petroleum Corporation (Amendment) Bill, which would empower the Commission to regulate economic, technical, competition and safety aspects of the petroleum industry, was approved by the Cabinet of Ministers in October 2006 and the Parliamentary Consultative Committee in September 2006.

The downstream petroleum industry comprises of the following activities, wherein, petroleum products include petrol, diesel, kerosene, aviation fuel, marine fuel, furnace oil, liquefied petroleum gas and petroleum resources include crude oil, natural gas and hydrocarbons whether in natural, liquid, gaseous, solid semi-solid state:

1. Importing and exporting petroleum products or petroleum resources;
2. Refining and blending of petroleum resources or producing petroleum products;
3. storing, distributing and transporting petroleum products or petroleum resources; and
4. wholesale and retailing of petroleum products.

In preparation of the envisaged regulatory role, the Commission has been advising and assisting the Ministry of Petroleum & Petroleum Resources Development and related Government agencies on policy and regulatory matters.