TRINCO OIL TANK FARM
Posted on May 30th, 2017

Capt Ranjith Weerasinghe

 Trincomalee Tank farm with 100 tanks in 850 acres of land need not be given to any country or any foreign company. Whatever the agreement with LIOC, all the tanks must be taken back to the government possession immediately as the COPE finds that there is no legal agreement signed to lease it out to them. The US$ 100,000 p.a or $8333.33 per month lease for all tanks in 850 acres is peanuts as we have individual professionals earning even more than that kind of monthly salary.

Developing 100 tanks and clearing the 850 Acres of land and pipe line and the Oil Jetty in Trinco harbour should be done by Sri Lanka government and owned by it and not even by Petroleum Corporation. So that Tanks are only hired out on a daily rate Per CBM per day”; for storage for anyone who wants to hire them for Crude Oil, Heavy Fuel Oil, Intermediate Fuel Oil, Refined products such as Diesel, Petrol, Kerosine, Aviation Fuel Etc, using dedicated tanks and separate pipelines to the jetty. It shall cost an affordable amount to Sri Lanka Government needing no loan involvements to clear our own backyard of 850 Acres. Management of that operation shall be done by the government owned or delegated company with corporate efficiency. They also can canvass for business to attract foreign companies to use the tanks for short term and long term storage of petroleum oil only on the basis of  ‘per cbm per day rate’ so that there is no question of long term leasing it out to anybody.

I reiterate that there is no need to get into another trap like Hambantota when the Trinco harbour, tanks and Land are already ours without a cent of debt to any one like in Hambantota. Why invite another country like India to jointly develop it. So we must make full use of our own asset for the country’s benefit. Hope the government has learnt the lesson hard way from Hambantota Port and Port City with the Chinese debts for next 400 years

I challenge any expert in the industry or the government including the Prime Minister to irrefutably justify why Trinco Tanks should be jointly developed with India or any other country.

What is the valid reason for Joint Venture ?

Doesn’t the Government have money to develop the tank farm ?

Cant the Govt. do a joint venture with Sri Lankan companies; why Indians ?

Does it cost an unaffordable amount to develop the tank farm ?

Do we intend buying and selling oil or look for offering the tanks for storage only ?

What is Lanka IOC doing with 99 tanks when there is no valid agreement with them to lease ?

  1. To upgrade the tanks and clear the land as a clean tank farm, it does not cost a lot; (not as much as many Prados to Ministers) Costs are within the reach of government alone.
  2. if the government cannot afford even that kind of investment, there are enough local companies who can do that and run the tank farm so that there is no need to give it to foreign countries.
  3. When there is no debt at all and the tanks are already there and owned by the country, why do we want to give it out to any other country to develop just like the debt-trapped Hambantota, specially to India which has other interests in holding onto land. Get the LIOC out of the hold on to the tanks first.
  4. Having an ambiguous MOU to agree to lease out the tanks to LIOC without a proper lease agreement signed at all, it is best to clear it out immediately and have the possession of the all 102 tanks, the pipeline & oil jetty and land vested clearly in the Government so that it can be hired on spot basis to anyone including CPC and LIOC only on Tankage hire on daily rate per ton.
  5. It is a business that can be developed to attract other oil traders in the region without having to give out on lease agreements. There are viable alternatives either as a sole government project or local private public partnership project There is ready business available and can be further developed hiring of tanks on per MT per day” basis and can earn 100 times more than what current lease does
  6. In the event of setting up a refinery in the country, storage facility is definitely needed for both crude oil as well as finish product. So let the tanks be our own assets
  7. Even if we don’t have any business for these tanks, let them be as they are; why do you want to give it to another country purely on the so called geo-political reasons the pundits in governments unduly infer or fear; (if giving it to a foreign country is the way to go, Govt can give that also to China; so that the so called geopolitical reasons will vanish immediately;

Capt Ranjith Weerasinghe

One Response to “TRINCO OIL TANK FARM”

  1. Dilrook Says:

    Makes good economic sense.

    There is a reason for not using these tanks for decades. They are useless!

    Petroleum industry begins with crude oil imports, refinery, storage of refined petroleum and distribution for sales. Each of these stages has a value (price). For instance, oil out of refinery = import cost + refinery cost + mark up. Refinery cost comes to the country by way of salaries, local goods and services. Mark up is additional earnings going to CPC (a government corporation).

    We have an oil refinery near Colombo. It makes no sense to store oil in Trincomalee for a refinery in Colombo. It also makes no sense to store refined oil in Trincomalee as it is far away from users.

    The only way Trincomalee tanks can be useful is if there is a refinery close by to which crude is pumped via the port or refined oil is imported via Trincomalee. Indians are planning to do more of the latter. This deprives Sri Lanka all the local earnings up to refined oil. Then it gets worse. Indian bringing refined oil charge us an additional mark-up (for their profit)! Therefore it is a triple whammy already.

    Then the refined oil is sold – the most profitable segment. CPC and locals have 82% market share now with Indian LIOC having the remaining 18%. LIOC share will be 100% with the Indian deal. This value and jobs also gone from Sri Lanka.

    If you thought the economic disaster ended there, think again. The entire value of the refined sold petroleum will go to India. Our trade deficit will worsen by another $2 billion at least annually in addition to job and business losses to locals.

    CPC needs investments in upgrading its wasteful refinery. This is what needs state intervention or private participation. If that can be done, even with other inefficiencies CPC will be making profit again every year.

    All deals with India are economically apocalyptic. Sadly, India can be defined as one large economic parasite with the beggar-thy-neighbour policy.

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