By Nishel Fernando
The state-owned Ceylon Petroleum Corporation (CPC) plans to enter into a joint venture (JV) with Lanka IOC PLC (LIOC) to develop the unused 85 oil tanks in Trincomalee, while retaining their ownership.
CPC also plans to operate 16 developed oil tanks for bunkering and distribution of refined petroleum products in the Northern and Eastern Provinces, at lower cost.
Addressing a press conference in Colombo, Petroleum Resources Development Minister Arjuna Ranatunga revealed that the Cabinet nod has been received to move ahead with plans to develop the Trincomalee oil tank farm.
However, a detailed plan is expected to be submitted to the president and Cabinet in the following weeks.
Ranatunga said he has received a favourable response from LIOC for the basic proposal.
The minister plans to participate in an official tour in India along with Prime Minister Ranil Wickremesinghe to discuss the proposal in detail with the Indian government.
He said that the cost of developments could run up to around US $ 85 million, according to a preliminary evaluation carried out by the engineers, where the cost of repairing for each tank is estimated at US $ 1 million.
Ranatunga noted that some of the oil tanks may need to be replaced completely, as they were not being used for past 15 years.
“We haven’t done any costing for repairs. However, some of the engineers analysing the oil tanks have informed me that the cost of repairing one tank will be around US $ 1 million. We will get the proper details within the next two to three weeks,” he said.
CPC plans to obtain 16 oil tanks in the tank farm after developing the 85 oil tanks through the JV, while the current agreement that has allowed LIOC to operate 15 tanks would be replaced by the JV agreement.
Ranatunga emphasised that CPC would be able to cut down the cost of distribution significantly by distributing the refined petroleum products from Trincomalee to North and East, while entering into bunkering business would bring CPC additional sources of revenue.
He revealed that the paper work has been finalized to issue a bunkering licence for CPC to re-enter the bunkering business.
“Most likely, we might seek investors for development. We might invite some investors and industry stakeholders to come and work with us to develop these tanks,” Ranatunga said.
Responding to allegation by trade unions and certain politicians on the proposed JV, he said, “When we are trying to develop these tanks to bring some income to the country, there’s a group of people who are spreading false rumours for cheap political and personal gains.
I am ready to face any trade union actions. However, if any of these actions disrupt the public, I am also prepared to take stern actions.”
Ranatunga pointed out that CPC is not in a position to fund the project on its own.
“We may have to replace all the tanks and rebuild them from scratch. Even if we can develop the tanks, what are we going to do with 100 tanks? The Engineers’ Union doesn’t even have any idea of what to do with 100 oil tanks.”
Ranatunga alleged that certain individuals connected to the fuel distribution business oppose any development of oil tanks, fearing their profits would go down.
New lower octane petrol for tuk tuks
The Petroleum Resources Development Ministry is planning to introduce a special low-octane petrol for three-wheelers, at a cheaper price, shortly.
Petroleum Resources Development Minister Arjuna Ranatunga yesterday announced that the special petrol, which is below 92 octane, would be Rs.7-8 cheaper than a litre of 92 octane petrol.
“We are planning to discuss with the Finance Ministry at the National Economic Council to reduce the current tax on petrol to introduce the special petrol at an even cheaper price to the public,” he said.
He noted that the research carried out with the involvement of local parties, including David Pieris Motor Company (Pvt.) Ltd—the biggest three-wheeler importer to the country— has been successful on both new and used three-wheelers.
He further said that this special petrol might even be suitable for certain types of old two-wheelers; it is however, yet to be tested.
Speaking of distribution, he said his ministry has already indentified 100 fuel stations to make the special petrol available, as it requires specific storage facilities.
He emphasised that the main purpose of this special petrol is to bring down the cost of living as three-wheelers are an extremely popular mode of transportation to many Sri Lankans.