Focus/Spotlight

Trinco oil tanks fueling controversy

By Skandha Gunasekara

Both the Janatha Vimuthki Peramuna (JVP) and the Ceylon Petroleum Corporation (CPC) Trade Union filed cases in the Supreme Court demanding a stay order on the Government’s proposal to develop the Trincomalee Oil Tank Farm through a joint venture between the CPC and Lanka Indian Oil Company (LIOC), alleging that it was an underhand move to hand over the oil tank farm to India.

However, Minister of Petroleum Resources Development Arjuna Ranatunga in Parliament on Friday (12) called on the JVP to desist from hampering Government endeavours to develop the Trincomalee Oil Tank Farm by way of the joint venture.

According to the Minister, the upper tank farm consisting of 85 oil tank would be leased out to a sub company – which is to be formed jointly by the CPC and the LIOC for upgrade and development. Of the 85, 16 tanks would be handed over to the CPC by this sub company once development activities have been fully completed. The Cabinet of Ministers would decide the time frame of the lease.

In addition, the Lower Tank Farm in Trincomalee, comprising of 15 oil tanks which are currently being used by the LIOC, would be retained by the LIOC for a period of time which is also to be determined by the Cabinet of Ministers. This new agreement would also result in the agreement proposed in 2003 being cancelled.

The proposal for the new agreement was submitted to the Cabinet of Minister on 13 July and the Cabinet gave its approval on 7 August.

Minister Ranatunga made these remarks in response to questions raised by Chief Opposition Whip and JVP leader Anura Kumara Dissanayake in Parliament on 21 September.

The JVP Leader in Parliament, raising a question under Standing Order 27/2, charged that handing over the oil tank in Trincomalee to the LIOC was a disadvantage to Sri Lanka.

“The 15 tanks in the lower system have been given to the Indian oil company (LIOC) while the 85 tanks in the upper tank system have been split between the Indian oil company and the Ceylon Petroleum Corporation through a joint venture according to the Cabinet decision taken on 7 August,” the JVP leader said.

Underhand deal?

MP Dissanayake said that retaining the Trincomalee oil tank farm for local use would be of great benefit to the island and particularly the debt-ridden CPC – a point which the CPC trade unions had made to the Government.

“The unions have informed the Government of the benefit these tanks would provide the loss incurring CEYPETCO – not only as storage use for the local market, but also for the international market as well,” MP Dissanayake said in Parliament.

However, speaking to The Sunday Morning, Dissanayake pointed out that concerns and suspicions were raised when an earlier attempt to upgrade the oil tank farm was suddenly halted by the Government sans justifiable reasons.

“This sudden halting of upgrades is highly suspicious. One can only assume that this is an underhand effort to hand over the entire oil tank farm to India,” Dissanayake said.

Meanwhile, General Secretary of the CPC Trade Union D.J. Rajakaruna told The Sunday Morning that Sri Lanka had been deprived of the benefits of the Trincomalee oil tank farm since the 2003 agreement.

Wastage and missed opportunity

According to Rajakaruna, an agreement was proposed on 7 February, 2003 to lease the oil tank farms to LIOC within six months of signing, but this agreement was never entered into. Instead the tanks were used by LIOC in an official manner while paying $ 1,000 per tank to the Sri Lankan Government. This unofficial pact was detrimental both to the CPC and the nation, Rajakaruna stressed.

“There are a total of 100 tanks in the oil tank farm in Trincomalee. That means the Government received $ 100,000 a year from the LIOC for the use of these tanks but the CPC only received $ 1,000 each year from this. Additionally, the LIOC only used 14 tanks in total while the others were left unused or used for the wrong purposes such as to store water. More than 80 tanks were idling without being put to use by the CPC.”

Furthermore, Rajakaruna alleged that LIOC had demanded a total of Rs. 980 million from the CPC for the use of the Trincomalee oil tanks during the latter stages of the war.

“We must recover this absurd amount of money that was given to the LIOC for using our very own oil tanks,” he said. He went on to say that the present situation allowed CPC to store oil for a maximum period of two weeks, pointing out that at least 20 oil tanks would be needed just to store oil for local use for a period of one month. In addition, Rajakaruna said that the CPC was wasting Rs. 1.5 billion each year to transport crude oil to the North, North-East, and the Eastern Provinces.

“If we had the use of the Trincomalee oil tanks, the CPC could save that money in transport costs alone each year.”

He then claimed that in 2016, Minister of Power and Renewable Energy Ranjith Siyambalapitiya and the then Minister of Petroleum Resources Development Chandima Weerakkody, had got approval from the Cabinet to use 10 tanks from the Trincomalee farm.

“But when the CPC workers went to Trincomalee, the LIOC employees barred us from entering the facility and we had no access to use the 10 tanks we were given authorisation to use,” he said, adding that the CPC had carried out island-wide protests in objection. He said that Prime Minister Ranil Wickremesinghe had met with the CPC trade unions and pledged to resolve the issue with the consultation of the CPC unionist.

“We even submitted a 200-page report, giving recommendations on the how to get the best benefits from the oil tank farm and the losses we would incur if the CPC is deprived of its use. But they never consulted us and in August this year, a new proposal was approved by Cabinet to go for a joint venture with India.”

He also pointed out that the 16 oil tanks that are to be given to the CPC in accordance with the new agreement would also be given on rent to the CPC.

“Why are we paying to use our own national assets? The LIOC should be paying for using our oil tanks, not the other way around,” Rajakaruna asserted.

JVP member and activist Wasantha Samarasinghe on Friday filed a case at the Supreme Court in objection of the Government proposal to go for a joint venture.

Samarasinghe told The Sunday Morning that his case before the Supreme Court stated that the fundamental rights of the people were being violated through this agreement between the Government and the LIOC.

“These are our national assets that are being given to a foreign company. We also have to pay to use our own asset.”

His demands included that the lease agreement with the LIOC be cancelled, that the Rs. 980 million paid by the CPC to the LIOC during the war be recovered, and that a stay order be issued on the agreement to go for a joint venture until all legal issues and court cases in this regard are resolved.
In this current situation, the Government has not been very forthcoming as to why a joint venture is needed or even as to why the CPC has to pay to use the 16 tanks. As the JVP points out, it would indeed be of significant monetary advantage if even half of the Trincomalee oil tanks were allowed to be used by the CPC without having to pay rent.