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MT New Diamond disaster compensation: Lack of knowledge costs millions

26 Mar 2022

  • Sri Lanka lacks marine biology expertise and base data to make effective claims
By Maheesha Mudugamuwa Uncertainty looms over the receipt of claimed compensation amounting to billions of rupees from the owners of the MT New Diamond oil tanker that caught fire in Sri Lankan waters in 2020. This, as the Marine Environment Protection Agency (MEPA) faces criticism that damages from the incident have not been properly assessed due to the lack of proper technology and facilities. Environmentalists have alleged that claiming compensation for marine damages should be assessed and processed properly without any loopholes, to ensure that the international agencies which were required to make payments couldn’t deny Sri Lanka’s claims and navigate away from making payments for the claims. The delay in receiving compensation from MT New Diamond was recently raised at the Parliamentary Committee on Public Enterprises (COPE) where it was revealed that a total of Rs. 3,480 million was yet to be recovered from the ship owners 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 in particular. According to COPE, the estimate of Rs. 3,480 million is an estimate obtained through a committee of experts to repair the damage caused to the environment under civil liability and MEPA had informed the Committee that the report had been submitted to the Attorney General’s Department. The MT New Diamond was carrying 270,000 Metric Tonnes (MT) of crude oil from the Port of Mina Al Ahmadi in Kuwait to the Port of Paradip in India when, on 3 September 2020, a fire erupted in the ship’s boiler in the main engine room about 38 nautical miles away from the Sri Lankan shore. There were 23 crew members including five Greeks and 18 Philippine nationals abroad, one of whom died before rescue teams arrived. Centre for Environmental Justice (CEJ) Executive Director Hemantha Withanage said the country lacked proper knowledge as well as research pertaining to marine biology. “To assess the damages caused there must be proper base data to justify those assessments made for damages,” he added. Explaining further, he stressed that the country did not have a base data collection so as to assess the impact on the marine environment as well the impact on the fisheries sector and overall economy of the country. “As an example, 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 have a base data collection,” Withanage said, adding that as a result of not having such a data collection as well as due to the lack of proper research, it was highly uncertain whether the claimed damage would be paid as compensation to Sri Lanka. As highlighted in an audit report issued by the National Audit Office (NAO), it is stated that in accordance with the powers set out in Section 7(b) of the Marine Environmental Protection Authority Act, the Authority has the power to conduct inquiries and enquiries into pollution arising from ship-related activities and to charge the charges of contamination by oil spills in connection with the New Diamond MT. A case had been filed against the Captain of New Diamond vessel in line with Section 26 of the Act. The Commander of the New Diamond was fined Rs. 10 million. Furthermore, as highlighted in the report pursuant to Section 38 of the Prevention of Marine Pollution Act No. 35 of 2008, MT is required to report to the coastal states the prevention caused by a shipwreck. A case has been filed against the Commander of the New Diamond and a fine of Rs. 2 million has been imposed. It is stated that the MEPA had requested $ 280,000 from the relevant shipping company on 3 September 2020, to control the fire on the New Diamond – approximately Rs. 52.3 million. This amount was deposited by the relevant shipping company in the General Treasury in the year 2020 and out of the proceeds Rs. 45.54 million had been provided by the General Treasury to MEPA. Section 34 of part lX of the Marine Pollution Prevention Act No. 35 of 2008 provides for the civil liability for the prevention of pollution. In the event of contamination of the water belt of Sri Lankan or other maritime area by any action under this Article, the owner of the ship, the person in charge of the ship, or the owner of such equipment shall be liable for any damage caused by the discharge or any discharge of any type of oil or other contaminants and such damage and shall be liable for expenses incurred for the purpose of deduction or removal.  This section covers maritime, coastal harbour or marine activities, tourism, tourism promotion, coastal and coral reef protection, and development, health, and wellbeing of coastal people and protection and conservation of living marine resources and wildlife, the report stated. Nevertheless, the NAO has stated that it observed the recovery of damages had not been done under Section 34 of the Act, until 30 April 2021, regarding the marine disaster by the ship New Diamond which took place in the Exclusive Economic Zone of Sri Lanka on 3 September 2020. Also, even though Section 34 of the Act includes the protection and consideration of living marine resources and wildlife, no action has been taken to recover the damages due to the accidents caused by the ship New Diamond. It had also observed that although action should have been taken to identify the sensitive areas for the protection and conservation of living marine resources and wildlife through gazetting, no action has been taken up to the date of audit. The NAO also stated that it was revealed that the Government had submitted an Interim Claim of Rs. 300 million on 16 September 2020 and Interim Claim of Rs. 100 million on 24 September 2020 to the relevant company and action was taken to recover the full amount which was taken to recover the fire of the ship New Diamond. Meanwhile, the payment of compensation was mired in controversy as it was reported that several underhand secret deals had taken place between the ship company and several Government big shots to reduce the compensation amount. In such a backdrop, concerns have been raised at the recent COPE meeting, where the committee had highlighted the amount received was significantly less than the values assessed under the Civil Liability Act. The committee 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. However, highlighting the issue concerning the compensation payments, Withanage stressed that the main issue with regard to the claiming of this compensation or even passing these claims by the Attorney General’s Department was because of the lack of proper knowledge about the subject. “We sometimes hire international firms for the task of assessing environmental damages. We still don’t know the total value of the damage of this New Diamond as it would definitely be having a long-term damage to the biodiversity which we are yet to assess. This is not an easy task,” he stressed. When contacted by The Sunday Morning, Justice Ministry Secretary M.M.P.K. Mayadunne said the Ministry had no involvement with the MT New Diamond case and it was only involved with the X-Press Pearl disaster as they felt that their involvement was necessary when obtaining compensation for damages caused to the environment as it involved highly-technical details. Meanwhile, the attempts by The Sunday Morning to contact MEPA and the Auditor General’s Department were futile.  


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