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MT New Diamond and MV X-Press Pearl disasters: Compensation payments still at sea

05 Jun 2022

  • Litigation is the last option: MEPA Chair
  • Defends delays in assessment process
  • Says MEPA working with Govt. stakeholders including AG’s Dept.
By Maheesha Mudugamuwa Concerns have been raised over the delay in receiving claimed compensation amounting to billions of dollars from the two recent major marine disasters. The impact of the two disasters that occurred in 2020 and 2021 had posed a serious threat to the country’s marine environment and related economic activities, but are yet to be fully assessed by the Government. Nevertheless, as per the calculations made so far, the country should receive a total of Rs. 3,480 million for the incident that occurred in 2020 and around Rs. 14,429 million for the 2021 disaster. MT New Diamond  In 2020, the MT New Diamond, carrying 270,000 metric tonnes (MT) of crude oil bound for India from Kuwait, caught fire on 3 September, 38 nautical miles off Sangamankanda Point. In addition, 1,700 MT of diesel required for the operation of the ship was also stored on board at the time of the incident. MT New Diamond, which was 330 metres long, was built in 1999 by the Japanese and launched in 2000. The ship was owned by a Greek company and was registered under the Panamanian flag and was 21 years old at the time of the accident on 3 September. The ship was registered under the International Maritime Organization (IMO) and was used to transport crude oil. However, as highlighted at a recent parliamentary Committee on Public Enterprises (COPE), the country is yet to recover the total of Rs. 3,480 million from the owners of the MT New Diamond as damages claimed by Sri Lanka, while only a sum of Rs. 12 million had been recovered and an amount of Rs. 51.3 million had been received in response to the ship’s fire and oil spill. As per the COPE, the estimate of Rs. 3,480 million had been obtained through a committee of experts to repair the damage caused to the environment under civil liability. However, the committee highlighted that the amount received was significantly less than the values assessed under the Civil Liability Act. It has also highlighted that although it was estimated that $ 44 million was to be obtained under the Civil Liability Act, only $ 6 million had been received so far. Out of the expenditure of Rs. 823 million for cleaning and other activities, Rs. 18 million was spent on accommodation. As revealed by the Auditor General’s Department, following the incident, the Marine Environment Protection Authority (MEPA) had filed a case against the Captain of the ship New Diamond, and a fine of Rs. 2 million had been imposed. MEPA had requested $ 280,000 from the relevant shipping company on 3 September 2020 to control the fire on the New Diamond, which when converted came to approximately Rs. 52.3 million at the time. This amount was deposited by the relevant shipping company in the Treasury in 2020, and out of the proceeds Rs. 45.54 million had been provided by the Treasury to the MEPA. It was further revealed that the Government of Sri Lanka had submitted an Interim Claim of Rs. 300 million on 16 September 2020 and another Interim Claim of Rs. 100 million on 24 September 2020 to the relevant company, and action had been taken to recover the full amount which was expended to put out the fire of the ship New Diamond. MV X-Press Pearl Sri Lankan authorities have filed a claim with the operator of the ill-fated feeder MV X-Press Pearl seeking $ 40 million to compensate for the environmental damages caused by the ship’s sinking. MV X-Press Pearl was carrying 1,486 containers when it caught fire off Colombo on 20 May 2021 and began sinking. Eighty-one of the containers had been labelled hazardous, and the cargo included 25 MT of nitric acid — a key ingredient in the production of explosives and touted as a possible factor for the fire. There were several explosions, and it took more than a week to bring the fire under control. Attempts to tow the vessel to deeper waters failed, and the freighter finally sank on 2 June 2021, a few kilometres off Sri Lanka’s western coast. The ship was also carrying 400 containers of nurdles – the plastic pellets from which all manufactured plastic goods are made. The spill of more than 50 billion pellets made this the worst plastic marine pollution event in the world, with the pellets quickly spreading along the beaches of Sri Lanka’s western coast. Meanwhile, environmentalists too have raised concerns over the compensation claimed by the authorities as well as the assessing of environmental damages caused by ship disasters. Centre for Environmental Justice (CEJ) Executive Director Hemantha Withanage said the country lacked proper knowledge as well as research pertaining to marine biology, noting that to assess the damages caused there must be proper base data to justify those assessments made for damages.     “We don’t have a base data collection to assess the impact on the marine environment as well as on the fisheries sector and overall economy of the country. If we are saying that we found some dangerous chemical from the seabed or seashore, we must provide proof that it was not there before the accident occurred. For that we should be having a base data collection,” Withanage said. According to him, it was uncertain whether the claimed damage would be paid as compensation to Sri Lanka, as the country lacked a proper mechanism to assess environmental damage. MEPA denies allegations In such a backdrop, when The Sunday Morning contacted MEPA Chairperson Dharshani Lahandapura, she denied allegations of a drastic delay in receiving compensation. She stressed that while there was a slight delay in receiving compensation, MEPA had no immediate plans to go for litigation as it was the last option in their process. Lahandapura shared that MEPA was in constant contact with the international legal experts hired by Sri Lanka and was working on the basis of mutual understanding with those companies to obtain the compensation claimed by Sri Lanka. “When you consider the compensation claims, it has four components. The first one is economic damage and the second one is property damage, restoration and monitoring studies and research. We have claimed only economic and property damages so far. Property damage means the damages caused to the boats and properties of fishermen. Other than that, we have claimed costs incurred by Sri Lankan authorities for the rescue and salvage operation. For the clean-up process there were some costs incurred, which we have claimed, and they have paid us a total of $ 7.8 million. There are some payments pending as well. Whenever we get a cost component, we claim it,” the MEPA Chairperson added. She noted that the claims that had already been submitted were separate from environmental damage claims. “We have undertaken a considerable amount of work, and we have compiled a report and submitted that to an Australian legal expert. We are in constant contact with them. They are also in the process of compiling all the information,” she said, adding that there was also no delay in submitting the environmental claims.  According to Lahandapura, the cost of the environmental damage falls under long-term monitoring and conservation. “We have to get samples, and say that ‘this happened because of this’. One such lab had to upgrade its technology,” she said. When asked about the overall delay in the process of receiving compensation, Lahandapura stressed that there was a slight delay. “We will be receiving another payment soon,” she said. “As a Government institution, we have to go through the Attorney General’s (AG) Department. Litigation would be the last option. As of now we are working with mutual understanding,” she added.   


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