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Crude oil supply: ESPO shipment racks up demurrage

23 Oct 2022

   By Asiri Fernando An oil tanker carrying 99,000 MT of Eastern Siberia Pacific Ocean (ESPO) crude oil remains off the west coast of Sri Lanka for nearly a month awaiting payment and racking up millions of dollars in demurrage charges, petroleum sector trade unions alleged yesterday (22). Trade Union Leader Ananda Palitha from the Jathika Sevaka Sangamaya of the Ceylon Petroleum Corporation (CPC) claimed that the crude oil shipment had been awaiting payment for 31 days.  According to Palitha, such vessels normally charge $ 150,000 per day in demurrage charges. The Trade Union Leader estimates that the delays in unloading may cost the taxpayer more than $ 4 million. When The Sunday Morning asked Power and Energy Ministry Secretary M.P.D.U.K. Mapa Pathirana about the demurrage cost, he acknowledged that demurrage charges were being incurred and had become a serious concern for the Ministry.  However, he would not comment on the value of the demurrage charges and how the Ministry planned to settle them eventually. When asked if the crude oil shipment could be rejected, Pathirana said that once an order had been placed and the vessel had arrived, the Government could not refuse it. Meanwhile, a senior Government official close to the matter told The Sunday Morning that the demurrage costs had not been finalised yet between the supplier and the importer, CPC.  “Demurrage for such vessels is calculated based on blocks of five days, a week, or in 10-day blocks. That is also negotiated when the payment is being finalised. To say that so much is due now is not accurate,” the official said, adding: “Nevertheless, some demurrage will be calculated and will need to be honoured by us.” Earlier this month, Minister of Power and Energy Kanchana Wijesekera acknowledged that the vessel had been at sea for over 20 days and was awaiting payment, adding that the Government was unable to source the dollars needed to make the payment for the shipment. “We are trying to make payments for the two previous shipments but have been unable to source the dollars needed,” Minister Wijesekera said. The Sunday Morning last week reported that the Central Bank of Sri Lanka (CBSL) had informed the Ministry that the maximum amount of dollar funds that could be made available for energy imports per month was $ 50 million.   


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