Business

CPC to save Rs. 1 b from H’tota facility

  • 24 tanks to preserve 10,000 MT of oil

 By Imsha Iqbal

The storage facility that was recently proposed by the Ceylon Petroleum Corporation (CPC) at the Hambantota International Port with the objective of developing the port as a strategic energy centre in Sri Lanka, is anticipated to reduce the distribution cost overall, which is about Rs. 1 billion per annum, The Sunday Morning Business learns.

Speaking to us, Ministry of Energy Secretary K.D.R. Olga stated: “The establishment of this proposed facility allows the petroleum product requirement to be distributed to the boundary areas, such as Ratnapura, from the Hambantota Port, which is expected to save almost Rs. 1 billion per year,” explaining the primary purpose behind the establishment of this refined petroleum product storage facility. 

She added that currently, distribution takes place from Kolonnawa and Muthurajawela only, with the existing facilities in the country, she said. 

Furthermore, she said that a preliminary study that was conducted with regard to the distribution cost reduction had demonstrated the need for such a storage facility. Adding, she said that the amount of rupees to be saved as a result of the reduction in transport cost was an approximation.

Accordingly, the new facility can contribute towards strengthening the distribution of the aforementioned products to the Northern, North Central, and Eastern Provinces, which now come from the facility in Trincomalee.

Speaking of the location, the Ministry Secretary said that the Trincomalee storage facility along with another at Hambantota would have the potential to provide bunkering for foreign ships that enter these ports.

She further said that the proposal on the facility is yet at the initial stage, where the business model on which it will operate has not even been discussed. She added that investment for the facility would either be through the CPC itself, foreign investment, or a public-private partnership (PPP).

“If we (CPC) construct a tank farm, usually, the storage facility is maintained by the CPSTL (Ceylon Petroleum Storage Terminals Ltd.). Therefore, we need to discuss how the new storage facility acts with the CPSTL – still no comprehensive study has been carried out on it,” said Olga, indicating that following the comprehensive study on the to-be-established storage facility, the authorities would come to a conclusion on the CPSTL.  

Upon inquiry of the capacity of the Hambantota Port facility, she responded that they roughly estimate that it could possibly store 10,000 metric tonnes (MT) of petroleum products, in a collection of 24 tanks in total.

Olga said that the proposal for the project would be finalised with a duration of one year, and the construction would possibly take two-three years. 

This facility is to be established 15 km away from the port, and this project has been allotted approximately 50 acres of land that is owned by the Sri Lanka Mahaweli Authority. 

The CPC signed a Memorandum of Understanding (MoU) with the Hambantota International Port Group (HIPG) in this regard last week.