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Sri Lanka state-run Petroleum Corporation to re-commence bunkering in Colombo Port.

Colombo, Feb. 24 -- Sri Lanka's state-run oil utility- Ceylon Bunkering Corporation (CPC) is to re-enter the country's growing lucrative bunkering business in the very near future, by commencing operations in Colombo Port.

Secretary to the Ministry of Petroleum Industries, Titus Jayawardene had ordered CPC to commence bunkering operations at the 'earliest possible instance'.

"During Wednesday's weekly Joint Stock Committee meeting Secretary Jayawardene ordered CPC's Commercial Division to start operations in Colombo Port soon," a high ranking official of the Petroleum Industries Ministry told the Asian Tribune in an exclusive interview.

It is likely that CPC will revive its defunct subsidiary- Ceypetco Marine Services (Pvt) Ltd incorporated in 2007, to carry out the marine oil supply business. Presently Lanka Maritime Services (a unit of Sri Lanka Shipping Company), Lanka Maritime Services of John Keels Holdings PLC and the Indian state-run oil giant- Lanka IOC PLC are said to be operating in Colombo Port, with LIOC leading in market share.

However currently, CPC does not have oil supply vessels or barges and operational strategies on how to re-enter the already highly competitive bunkering market had not yet been fully discussed, sources told Asian Tribune. (Already nearly five out of the original eight operators have abandoned bunkering business in Colombo Port, allegedly due to 'under-cutting tactics' of LIOC)

Privatization of CPC's bunkering business

The United National Front (UNF) government under the guise of privatizing loss making State-Owned Enterprises (SOEs) privatized bunkering and lubricant arms of CPC, (which were actually profit making ventures of CPC) in a bid to 'liberalize' the oil industry. (This left the government with only the oil wholesale and retail business which now without CPCs profit-making arms, had to be supported by treasury subsidies.)

Bunkering arm of CPC, Lanka Marine Services Ltd (LMSL), along with the monopoly of supplying marine oil in Colombo Port was awarded to leading local conglomerate John Keells Holdings in 2002. (Meanwhile global oil giant, Chevron Texaco succeeded in acquiring the lubricants arm, Lanka Lubricants Ltd).

In its 2008 landmark judgment, the Supreme Court of Sri Lanka ruled that the privatization of LMS was 'tainted' and ordered the reversal of the deal.

However instead of CPC being vested with the bunkering business, the owner of the tank farm- Sri Lanka Ports Authority (SLPA) was given the control of the storage facility, which was converted into a common user facility.

2007-9 bunkering scandal of CPC

In 2007, then Chairman Asantha de Mel, (who was embroiled in the infamous hedging scandal) had an ambitious plan to re-commence oil explorations, marine and lubricant businesses, and CPC incorporated its wholly owned subsidiary- Ceypetco Marine Services (Pvt) Limited to engage in offshore bunkering activities in Hambanthota.

During an April 2007 meeting, held with Board of Investment (BoI) of Sri Lanka and Strategic Enterprise Management Agency (SEMA) green light was given to CPC to recommence bunkering activities, under BoI concessions.

The CPC decided to re-enter into bunkering business by having Colombo and Galle as delivery points and out-harbor bunkering off Hambanthota in due time and was to initially charter two tankers towards this end.

However, strangely abandoning the original plan, CPC later on called EoIs (Expressions of Interest) for "Operational associates of CPC in Supply of Bunkers", and required somewhat 'tailor-made' criteria, where bidders were to possess "at least one barge of 1,000 Metric Tons where 750 MT of Fuel Oil and 250 MT of Marine Diesel Oil could be loaded", "skilled crew experienced for bunker supply operations" and "possess required experience in bunker delivers through barges".

After two years, in 2009, de Mel's successor- Gen. Asoka Thoradeniya suspended bunkering operations with Inter Ocean Energy, after complaints were made that the latter was deriving undue profits, buying fuel oil at a very low price from CPC and selling at an exorbitant rate to vessels.

SLPA to commence bunkering in H'tota in May

Meanwhile Asian Tribune reported last January, that Sri Lanka Ports Authority (SLPA) would commence high sea bunkering off the newly-built Hambanthota International Harbor by May this year.

Country's Ports Chief Dr. Priyath Bandu Wickrema is positive that the Ruhunu Magampura Mahinda Rajapaksa International Port, which saw its Phase One being completed last August, would finish the construction of its fully-fledged tank farm with a capacity to hold 80,000 Metric Tons of marine oil by April.

-Asian Tribune-

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Publication:Asian Tribune (India)
Geographic Code:9SRIL
Date:Feb 24, 2011
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