Pipeline to Kolonnawa oil Terminal to go ahead

The Petroleum Resources Development Ministry will lay a Cross Country Pipeline from Colombo Port to Kolonnawa Oil Terminal on a Government to Government agreement and 100% financing on EPC (Engineering Procurement and Construction) turnkey basis either with the US, China, India or Malaysia at a cost of Rs. 17 billion, the Daily Mirror learns.

Petroleum Resources Development Minister Chandima Weerakkody has got the Cabinet approval to go ahead with the project and select a suitable investor from one of the above countries.

Minister Weerakkody has been authorised by the Cabinet to appoint a skeleton staff in the Ceylon Petroleum Storage Terminals Ltd, (CPSTL) including local or foreign consultant if necessary for the project and also to authorise Secretary to the Ministry of Finance to grant a tax waiver for importation of necessary materials, equipment, machinery and services. The Secretary to the Ministry of Finance will provide a Sovereign Guarantee for the full loan amount to meet 100% of the project cost, in favour of the Ceylon Petroleum Corporation (CPC) under an on lending agreement between CPC and CPSTL, for the selected contractor.

The most favourable procurement method was advised to be selected by the CAPC with the assistance of TEC (Technical Evaluation Committee) to implement this project in a transparent, efficient and economical manner after preparing total cost estimate having determined the overall scope relating to the project in consultation with the Ministry of Finance. The TEC will recommend a suitable procurement method to be adopted, among International open Competitive Bidding (ICB), Limited Competitive Bidding (LCB) and Government to Government (G-G) procurement methods, Minister Weerakkody said.

Minister Weerakkody has informed the Cabinet that four proposals from the US, China, India and Malaysia had already been received and CAPC is of the view that RFPs should be called only from those four countries and to receive only one each comprehensive proposal recommended by the respective Embassy / High Commission for the scope approved by the Board of Directors of CPSTL in 2015.

CPSTL has already designed 75% of the pipeline up to the tunnel gate of Colombo Port from Kolonnawa Terminal and off-shore segment and loading arms at Dolphin Pier need to be designed.

In the meantime, CPSTL has continued with the refurbishment project of existing pipeline and is now ready to undertake the segment at Orugodawatta railway crossing.

As most of material and services of this project need to be imported, a considerable tax component will be added on the total project cost, which will increase the project cost. Considering this as an urgent, national project, a tax waiver is proposed for materials and services that may have to be imported and also the ICPSTL to undertake urgently the refurbishment of the pipeline using its own funds and resources. (Sandun A Jayasekera)