brand logo

CPC to invest $ 25 m to renovate 24 oil tanks

10 Jan 2022

  • 24 tanks in China Bay are under direct control of CPC
  • Engineers in the process of formulating development plan
  BY Shenal Fernando Ceylon Petroleum Corporation (CPC) will be investing an estimated $ 25 million for the renovation and development of the 24 oil tanks in the Trincomalee Oil Tank Farm in China Bay, which will be under the direct control of the CPC, The Morning Business learns.  Speaking to us yesterday (9), CPC Chairman Sumith Wijesinghe stated: “Our engineers are currently formulating the initial plans for the implementation of this development process. We have already created a rough estimate of the total cost of the project and will be working on it over the next few days as well and hopefully, an official estimate can be provided within a short time. Based on our rough estimates, we expect the total investment for the development of these 24 oil tanks to amount to $ 25 million.” Commenting on the status of the newly formed “Trinco Petroleum Terminal (Pvt.) Ltd.”, a subsidiary jointly owned by CPC and Lanka Indian Oil Company (LIOC), he stated that the initial directors had been appointed from both sides to carry out the necessary activities for the formation of the company and that Board of Directors will be appointed in a short time. Adding to this, Minister of Energy Udaya Gammanpila stated that currently there is no established timeline as to when the joint development of the 61 oil tanks under Trinco Petroleum Terminal (Pvt.) Ltd. will commence. “This company was just formed; we need to issue shares to the relevant parties and appoint a Board of Directors who will need to carry out a feasibility study, based on which a business plan will be created. It is the directors of this new company who will decide the timeline for the commencement of this joint development,” stated Gammanpila. He further denied the recent assertions made by Sri Lanka Podujana Peramuna (SLPP) MP Chandima Weerakkody at the 123rd birth anniversary of former Prime Minister S.W.R.D. Bandaranaike that the Government capitulated to Indian pressure and had given away 49% ownership of Trinco Petroleum Terminal to LIOC at a significant discount and that such a stake should have involved a minimum investment of $ 20 billion. “Did he produce any evidence to support his claim? Everything I say is supported by documentation. If he provides documentary evidence of his claim, then I can respond to it; any person can come and say that this is worth $ 100 trillion,” stated Gammanpila.  The Trincomalee Oil Tank Development Complex Project was approved by the Cabinet of Ministers on 4 January. Accordingly, it was decided that 24 of the 99 tanks will be given to CPC, 14 tanks will be given to LIOC, and 61 tanks will be given to Trinco Petroleum Terminal (Pvt.) Ltd., the latter on a 50-year lease, with CPC having the majority stake in the subsidiary.  Consequently, LIOC and the CPC entered into an agreement on 6 January for the joint development of the 61 tanks held by Trinco Petroleum Terminal as a joint venture. Accordingly, CPC will hold a 51% stake in the company and LIOC will hold a 99% stake in the company.  This agreement between LIOC and the CPC will be presented to the Cabinet of Ministers today (10) and subsequently to Parliament next Tuesday (18).  The Trincomalee Oil Tank Farm, built by the British as a refuelling station during World War II, is located on 850 acres of land and originally contained 101 tanks, each with the capacity to hold 12,100 metric tonnes of oil. Out of the original 101 tanks, two had been destroyed in a kamikaze attack during a Japanese air raid on Trincomalee on 9 April 1942 and when a Royal Ceylon Air Force plane crashed in the early 1960s. LIOC acquired a one-third stake in Ceylon Petroleum Storage Terminals Ltd., which operated the Trincomalee Oil Tank Farm in 2003. Subsequently, LIOC entered into a Memorandum of Understanding (MoU) with CPC for a 35-year lease to operate 32 of the 99 oil tanks for an annual payment of $ 100,000. However, parties were unable to finalise this 35-year lease due to strong opposition by trade unions and political parties. During Minister of Finance Basil Rajapaksa’s visit to India last month, he had reportedly initiated a fresh round of talks with India and LIOC, where India had offered support to Sri Lanka on four pillars, including the early modernisation of the Trincomalee Oil Tank Farm.  Due to Sri Lanka’s current foreign reserve crisis, the country has sought financial assistance from India in the form of a $ 400 million currency swap to help Sri Lanka address the existing balance of payment issues; a $ 1 billion line of credit to cover the import of food, medicines, and other essential items from India to Sri Lanka; and a $ 500 million line of credit to cover the importation of fuel from India. 


More News..