YAHAPALANA AS A WAKE UP CALL Part 3A
Posted on August 23rd, 2018

KAMALIKA PIERIS

The Yahapalana government is encouraging detailed, long winded exposures of mismanagement and corruption in public projects. This is the first time, as far as I know, that the public are treated to such accurate, detailed information.

The Yahapalana government encouraged complaints against the Uma Oya scheme .Former President Mahinda Rajapaksa issued a statement in response, where he said, the diversion of the Uma Oya has been under discussion for well over sixty years.

The idea was first mooted in 1959 in a study carried out by the United States Operations Mission and the Canadian Hunting Survey Corporation. It also featured in the United Nations Development Programme/Food and Agriculture Organisation Master Plan (1968-1969) for the Mahaweli project. Studies regarding the Uma Oya diversion project were also carried out by the Lahmeyer International Company of Germany in 1989, by the Central Engineering Consultancy Bureau (CECB) in 1991 and by SNC Lavalin Inc of Canada in collaboration with the CECB in 2000.

During the UNP led government of 2001-2004, at inter-ministerial meetings held in December 2003 and February 2004, chaired by the then ministers of power and energy and irrigation Karu Jayasuriya and Jayawickrema Perera with the participation of all the ministers and MPs of the Uva province, it was decided to implement the proposed Uma Oya scheme as a high priority project.

On 26 January 2005, under the Chandrika Kumaratunga government, Cabinet approval was granted to proceed with the Uma Oya project, based on a cabinet paper submitted by the then Minister of Agriculture, Livestock, Land and Irrigation, Anura Kumara Dissanayake.  The Deputy Minister of this ministry at that time was Bimal Ratnayake. The JVP Minister’s Cabinet Paper bearing No: 05/0036/039/002 dated 4 January 2005 stated the following: “For the development of the South East Dry Zone in Sri Lanka, (particularly Hambantota and Moneragala districts) there is no other alternative unless water is diverted from Uma Oya to the South East Dry Zone.

“Strategy for economic development of both Hambantota and Moneragala districts changed during the recent past and diversion of Uma Oya to Kirindi Oya is now seen in the perspective of recently conceived Ruhunupura development. The infrastructure of Ruhunupura development consists of the development of the Hambantota harbour into one of the modern harbours in the region, international airport in the Moneragala district, and an oil refinery,” continued the Cabinet paper.

It is expected that the Hambantota harbour will attract a large number of ships sailing in the Indian Ocean. Also a large number of industrial activities are expected to take place in and around Hambantota including tourism. For all these new developments, projected water requirement has been estimated as 100 MCM in the year 2030. In the absence of a reliable source of water in the area, water from Uma Oya is seen as the only alternative to supplement this requirement.””Therefore high priority should be given for this project concluded the Cabinet paper.”

It was only after this, that the Uma Oya project appeared in my 2005 presidential election manifesto as a priority project. From winning the war against terrorism to building highways, harbours and power plants, my government did many things that previous governments had only been able to dream about, but never implement. Uma Oya was one such project, continued Rajapaksa.

On 27 November 2007, consequent to consultations held earlier that year by the then Minister for Enterprises Development Sarath Amunugama and the then Minister for Power and Energy John Seneviratne with the Export Development Board of Iran (EDBI) and Farab Company of Iran, an MOU was signed with the Iranian government under the terms of which the EDBI would finance the project and Farab Company, would prepare the detailed engineering design and carry out the physical construction.

The contractor Farab Company is owned by the Iranian government and a team of engineers from the Irrigation Ministry, CEB and CECB had checked the credentials of this company and its experience in handling similar projects. In 2008 a Cabinet Appointed Negotiating Committee got the contract price fixed at USD 514 million. Though the contract was signed in 2008, construction did not commence until 29 November 2011 until the Central Environmental Authority gave it clearance and a full feasibility report acceptable to the engineers of the Irrigation Ministry, Ceylon Electricity Board and the Central Engineering Consultancy Bureau had been received.

The Uma Oya project has come in for much criticism in recent times. A few days ago it was reported in the media that the Kirindi Oya tributary which flows past Bandarawela had suddenly gone dry as a result of this project. The leader of the JVP stated in Parliament some weeks ago that as a result of ground water seeping into a tunnel being constructed as part of the Uma Oya project, 2,333 wells, streams and springs in the Bandarawela area had run dry, and cracks had appeared in 4,625 houses, six temples, one mosque and three schools in the area due to the change in ground conditions, and further that thousands of acres of agricultural land have been affected.

After things started going wrong, members of the JVP, ministers in the Yahapalana government and various NGO activists have been making statements aimed at laying the blame for all this on me and my government. One minister said that this situation had come about because I had wanted to divert water to Hambantota to irrigate land in my village.  President Sirisena also stated that this project had been carried out due to ‘political requirements’.

The Uma Oya project consists of constructing a dam and reservoir across the Uma Oya at Puhulpola from where water would be diverted via a 4 km tunnel to another dam and reservoir constructed across the Mahatotilla Oya in Dyraaba. Water from this second reservoir would be channeled through a 15.3 km tunnel to a hydroelectricity powerhouse. The outflow from the powerhouse is to be diverted via a 4 km tunnel into the Kirindi Oya, to provide water to parts of the Moneragala and Hambantota districts. Ground water seepage is inevitable when drilling tunnels, measures have to be taken to prevent it, concluded Rajapaksa.

G.T. Dharmasena, former Director General, Department    of Irrigation, continues the story. The ground water table has been lowered due to the construction of the trans-basin tunnel, he said. This leads to an interruption of the domestic water supply, also other geological problems, such as landslides and the settling of foundaitosn of buildings.

The rock in the Badulla region is not granite. It is a mixture of sandstone and limestone, and hence amenable to boring. But the engineers should have made provision for forward probing and sealing cracks to avoid the leakage of water and reducing the water table of the ground above, which was the cause of the cracking in buildings constructed with shallow foundations on weak soil. There are no building regulations for this in Sri Lanka and these buildings, set on shallow foundations tend to crack with the slightest movement in the underlying soil. A knowledge of tunneling, and experience on Tunnel Boring Machines (TBM) is needed, said Dharmasena.

Depletion of the ground water table and settlement of a large number of houses and cracks are the critical issues at the moment. As explained by experts, provision has to be made for forward probing and sealing cracks to avoid the leakage of water and reducing the lowering of the ground water table after drilling. According to the physical progress of the project at the moment, there is no possibility to turn back, as 70% of the work has been completed. Therefore, we have to go forward while rectifying the defects, continued Dharmasena.

People are blaming the Environment Impact Assessment (EIA)   done before the project started. But this matter has nothing to do with the EIA.  Technical issues that one would meet during a tunnel construction cannot be identified in an EIA study in advance. However, it is the responsibility of engineers to rectify those issues once construction starts. This requires adequate previous experience in tunnel construction in different geological conditions, as problems cannot be foreseen before actual drilling, said Dharmasena.

Most of the people who write articles and appear in TV debates have absolutely no idea of tunneling, and very few people, if any, in Sri Lanka have any experience on Tunnel Boring Machines, said Dharmasena. ‘The whole thing has been hijacked by some political elements in order to rouse up the poor uneducated people in the Uva province,’ without letting someone with some expertise explain the facts and the reasons behind this debacle. Most of the discussions are a pathetic display of ignorance, concluded Dharmasena.

Guwan Seeya” has written to the newspapers, giving readers the history of Sri Lanka’s national airline ‘Air Ceylon’.  Air Ceylon started with a lot of promise, in 1947, using Douglas Commercial 3 (DC3, Dakota) aircraft which were modified C47 military war surplus airplanes and freely available in the market at that time. An estimated 10.700 were available after WWII. There were enough Ceylonese war veterans to fly and maintain them, led by Capt. Peter Fernando who had taken part in the Burma Airlift and Mr. Bunny Molamure who was an engineer and pilot. They were not short of engineers and mechanics either, said Guvan Seeya”.

As a next logical step, Air Ceylon had two Lockheed Constellations on order. The Lockheed was a state of the art aircraft which was, pressurized and capable of flying long distances (3,000 miles) at 20,000ft. Had we gone for those two airplanes, we would have been abreast with the rest of the world. That’s what Air India did.

But Instead of sticking to the original plan, the government of Ceylon decided to tie up with Australian National Airways (ANA). The official reason given for Australians buying into Air Ceylon was to teach the Ceylonese to fly and help expand its services. The real reason was that it enabled Australian National Airways to share with Qantas Airlines on the London-Australia route which was heavily subsidized by the Australian Government, using Ceylon’s bilateral agreements. Air Ceylon was just a means to an end.

Once ANA came in, the two Lockheed aircraft were forgotten. ANA operated DC 4 aircraft which were unpressurised, noisy, operating at low altitudes and in short old technology. The technical people of Air Ceylon protested, and stated that the DC4 was only a four engine DC3 and that Air Ceylon didn’t need Australians and could go it alone. The first all Asian Crew to fly to Australia went on an Air Ceylon plane.

No national pilots were taught to fly the DC4s, as promised and the Ceylonese were reduced to flying the DC3s within Ceylon and India. Soon the DC4 aircraft lost their passenger appeal and became obsolete unlike Lockheed. .ANA pulled out and Air Ceylon shares were bought by KLM Royal Dutch Airlines. KLM also ‘piggybacked’ on Ceylon’s bilateral agreements. We became a part of the ‘Golden Circle’ Route. Except for training one or two pilots and a handful of Ground/Flight Engineers and Traffic officers, no real effort was made to train our personnel. The Air Ceylon proper was reduced to a carrier in the Indian subcontinent.

BOAC came in after KLM pulled out .BOAC’s uneconomical, DH Comet 4 and Vickers VC 10 operations were looking after Air Ceylon’s international obligations, but there was no training of flight crew. Then came the French airline, UTA. They promised to train a hundred pilots for the national carrier but could not do so since the French Pilot Union objected. UTA would have known this well before they signed the agreement.

UTA linked with Air Ceylon because they wanted to fly to Australia using our traffic rights. They gave Air Ceylon a guaranteed profit of Rs.12 Million but dumped their oldest DC 8 (4R- ACQ) on Air Ceylon. At the end of the contract this was owned by Air Ceylon. But UTA found that the passenger numbers were limited to the DC4 aircraft capacity and not for UTA’s DC8. Also that according to the agreement, an all Ceylonese crew was needed. That put paid to all UTA’s ambitions of using Air Ceylon.

In 1979 Singapore Airlines came in. A brand new national airline,” Air Lanka” was formed. Singapore Airlines moved some of their ‘difficult’ staff sideways to Air Lanka, so that SIA operations could progress unimpeded. They also used Sri Lanka as a commercial stop to and from the Middle East to Singapore. When Air Lanka objected SIA moved their operations to the Maldives Islands.

Air Lanka turned to Emirates. Emirates too made use of our traffic rights to other countries and reduce us to a niche carrier. Guvan Seeya concluded by observing that Air Ceylon always lost  in these  link ups,  they  had to dance to the tune of their expatriate partners.

An inquiry is going on at present over the current national airline, “Srilankan Airlines”.  All sorts of things are coming out. The inquiry is not over. Here are a few selected items which have appeared in the public domain.

SriLankan Airlines had purchased airbuses on lease at 40 per cent above the market value. Six newly leased twin engine aircraft of SriLankan Airlines lacked Extended Twin Operations certification. ETOPS is given by the Civil Aviation Authority of Sri Lanka. ETOPs permitted air lines to fly over places where  there were no airports and landing areas such as long routes over the ocean. Without this certification SriLankan flights had to fly in such a way that it is always within an hour of an airport to land in case of an emergency. They had to ‘hug the coast,’ and take a longer route instead of the direct route. SriLankan maintenance has also lost European Aviation Safety Agency (EASA) certification.

Phoenix Duty Free Services, had violated  both, its agreement and the Customs Ordinance. Phoenix was expected to obtain duty free items on behalf of SriLankan and deliver them to a bonded warehouse in Sri Lanka. The return items also had to be delivered straight to the supplier. Instead, Phoenix held those goods in its warehouses in Singapore.

Harry Jayawardena, who took over the airline after the exit of Emirates, had tried to introduce accountability and transparency,  but on the whole, the Chairmen, CEOs and boards of directors appointed to SriLankan Airlines since the exit of Emirates management had not contributed to the development of the company, said those giving evidence before the Commission.   Most of the officials were selected on the basis of family and political connections. ‘We know this because they spoke of their connections openly.’ If someone eligible was appointed, others would undermine him. Manoj Gunawardena, appointed CEO in 2009, had a clear vision, but he had been undermined.

Prime Minister Ranil Wickremesinghe and the Minister of Public Enterprise Kabir Hashim had instructed the Board of Directors of SriLankan Airlines to confirm Capt. Suren Ratwatte as the airline’s CEO prior to his performance appraisal, which was mandatory for his confirmation, Directors  agreed to this  and Ratwatte was confirmed without an evaluation of his performance (Daily News 19.6.18 p 8).  Captain Suren Ratwatte had not been suitable for the post, said witnesses. “He made some decisions that led to the pilot fatigue, which increased risk of accidents.

There is now open discussion about the Trincomalee oil tank farm. As far as I  know, this is the first time that this issue has been aired so extensively and openly  in the public domain. The Trincomalee  oil tank farm and the  involvement of the Indian Oil Company in the fuel distribution business came up prominently at the oral submissions made to the People’s Commission to formulate a National Policy on International Trade and Treaties in 2017.

Minister Susil Premjayantha  told this Commission, that the LIOC sells only 15% of the fuel sold in Sri Lanka and that the CPC handles the other 85%. LIOC does not have enough sales in Sri Lanka to justify leasing out all the  oil tanks in Trincomalee and what they were after was not really the oil tanks but the land on which the oil tanks stand.

Minister Premjayantha  said that the oil tank farm should be used by Sri Lanka to build up buffer stocks of fuel when prices are low. At present only 42 days supply of fuel could be stored in the existing facilities but if the Trincomalee  oil tank farm is fully utilized, a buffer stock of four months supply could be built up. “I submitted a Cabinet paper to keep 10 of these tanks under the government and lease the balance 75 tanks to a company jointly set up by India and Sri Lanka. That is leasing and not selling off. That paper has not been approved by the Cabinet” concluded Premjayantha

The history of the Trincomalee Oil tank farm is well known. A large oil storage tank farm of 850 acres was built in China bay, Trincomalee by the British, during  World War II, to provide diesel for Britain’s  South East  Asia Command ships.  Made of the best Manchester steel, 99 of these tanks, each with a capacity to hold 12,100 metric tons of oil  remained in good condition. Britain retained ownership of this tank farm even after independence.   In 1957 Prime Minister S.W.R.D. Bandaranaike paid compensation of 250,000 Sterling pounds   and secured ownership.

The tank farm has two sections identified as upper and lower farms. Lower tanks are situated on the seaside of the China Bay – Kinniya main road. It has 16 tanks. The upper tanks are situated on the land side of the main road. It has 84 tanks, making a total of 100, but only 99 are usable. . One of them was destroyed due to bombing by the Japanese during the War. The  tanks are intact and  in good condition. Super quality iron had been used to build them. Each tank has a capacity of 12,000 Mt and can store furnace oil  , auto,  diesel or kerosene.

India did not want a hostile power to get hold of Trincomalee.  India used the  indo-Lanka Accord of 1987, to gain control over Trincomalee . The  Accord  contained annexures relating to Trincomalee harbour. The public  were not told of these annexures at the time. These annexures  barred other countries from using the Trincomalee  tank farm and specified that the work of restoring and operating the tank farm was to be done as a joint venture between India and Sri Lanka  . The annexures  also stipulated that neither Trincomalee nor any other port could be used by a foreign power against India.

The  UNP Government  had in 2002 planned to lease out 10 tanks to Singapore. This plan was abandoned in favor of India.  A  tripartite agreement was  signed between the Sri Lankan Government, the LIOC and the CPC7 in  February 2003   leasing  the Trincomalee   tank farm to the IOC for 35 years, for an annual rental of USD 100,000. This gave India a significant presence in the strategic Trincomalee port.  India was to provide  its own security for the oil tanks, CPC employees staged protest demonstrations against this move but they were  ignored and the agreement was signed. IOC  thereafter used 15 tanks   in the lower section.  One other tank was  given to Prima.

Critics observed that the fuel tank farm in Trincomalee was handed over to India instead of to the highest bidder. Why was the tank farm handed over to India instead of the highest bidder , they asked. Why hand over Trincomalee Port to the Indians who have never been our friends? India looks to her own interest first. Why was the farm not left in the hands of the Sri Lanka navy, critics asked.

In 2012, LIOC applied to Sri Lanka’s Board of Investment to set up a US$ 5.2 million bitumen handling facility in the upper tank farm. But approval was not granted.    The LIOC then  submitted other proposals to develop the upper tank farm  but these were also refused.

Once the   Yahapalana  government    came in, India  revived its push on the upper tank farm it wanted to  build  a modern tanker berthing and pumping facility to store bulk petroleum  to be transshipped to various parts of India.  IOC would extend the jetty to accommodate super tankers, since it had a  draught of only 13 meters,  not enough to berth big tankers. India also agreed to first renovate 10 tanks in the upper farm for Sri Lanka’s exclusive use  and expressed willingness to set up a joint venture.

Thereafter, the oil tank matter started to go in two rival directions The Ceylon Petroleum Corporation trade unions had submitted a proposal for the 2017 Budget, that the China Bay farm to be vested in the CPC.

Similarly in November, 2016 Minister of Petroleum and Petroleum Gas, Chandima Weerakkodi, and Minister of Power and Renewable Energy Ranjith Siyambalapitiya submitted a joint proposal to Cabinet demanding that the 16 Oil tanks from the China Bay Tank Farm now held by India, be vested totally in the CPC with three of them to be taken over immediately and the rest within 3 months. They had found that that there was not enough storage to stock fuel from four vessels that had brought in emergency consignments for thermal power plants during a  drought.

The proposal was approved on 6 December, 2016  Lanka IOC pointed out that  there is an agreement between India and Sri Lanka and  negotiations  will be needed. However,  CPC engineers visited the China Bay oil tank farm on 15 December with the intention of implementing this Cabinet decision.

When CPC engineers visited the China Bay Tank Farm to implement the Cabinet decision  they were locked up. Four officials, including a deputy manager had been held captive by officials of the Indian Oil Company (IOC). They had been locked up for about one hour. The two vehicles the officers had come in had also been held by the IOC officials.

Senior vice chairman of the Indian Oil Company complained to the police that the CPC officials had been given permission to enter the area only on one particular day, December 28th, but the officials had come on the 29th. So they were trespassing. There was a bilateral agreement and no one was allowed to enter the site without the permission of higher officials.

Engineers who tried to enter the China Bay Oil Tank Farm on 15 December complained to CPC authorities but the authorities took it lightly. Minister of Petroleum said he had not been informed of such incident. Yahapalana was reluctant to offend India.

Prime Minister Ranil Wickremasinghe     submitted a Cabinet memorandum  on December 6, 2016 requesting the Cabinet to withdraw the earlier decision and  give approval to hand over the China Bay Tank Farm to a joint venture between the CPC and the LIOC.    SLFP said that the SLFP ministers, including the President, did not want to give the tank farm away, but Prime Minister Ranil Wickremasinghe wanted to do so.

Prime Minister informed Parliament in March 2017 that a policy decision had been made to develop Trincomalee Oil Tank Farm as a joint venture between the Ceylon Petroleum Corporation and the Lanka IOC. 50 percent shares will be held by the Government of Sri Lanka. Ten tanks in the Upper Tank Farm will be reserved for the exclusive use of Sri Lanka. The government had decided to overcome the existing disputes regarding the lease by having a new agreement.

The land of the Upper Tank Farm, which is currently in possession of Lanka IOC PLC, is to be leased to this joint venture by Lanka IOC. The land of the Lower Tank Farm, which is also in possession of Lanka IOC, will be leased to Lanka IOC directly.  Yahapalana  government stated that it is only leasing these tanks, not selling them. The period of all the leases will be 50 years, extendable up to a maximum of 99 years.

Yahapalana said, soothingly, that the Trincomalee Oil Tank Farm is a national asset which was left to decay. The tanks are now engulfed in thick jungle, with only the tops visible. Is it our duty to leave such a national asset to gather rust or to make use of them to develop our country?  It is a crime  to leave such an asset to the elements. India is not going to take the farm and run away.

There would be a huge demand for oil in the next 50-60 years in India, babbled Yahapalana . Our plan is to make use of this storage facility to enable the CPC to enter the Indian market. We plan to export oil to India, while catering to our domestic needs as well. Now who in Sri Lanka can object to that asked Yahapalana .

Critics did not agree. What is the valid reason for this joint venture? Doesn’t the Government have money to develop the tank farm? Can’t the government do a joint venture with Sri Lankan companies? Why Indians, they asked. India was entering into this agreement to stop other countries   getting into Trincomalee. What they were after was not the oil tanks but the land on which the oil tanks stand. The strategic geophysical location of the China Bay oil tank farm should be factored in when agreements of this nature are being negotiated, they suggested.

The new agreement was intended to fully legalize India’s hold over this prime asset and the land it stands on. It would iron out any shortcomings in the 2003 agreement.    Further, up to now India only used the tanks in the lower level. Under the new agreement India  gets 30 oil storage tanks in the upper level as well.

The proposed agreement will only benefit the IOC and will help the Indian Oil Company to expand further in the island, critics said. LIOC sells only 15% of the fuel sold in Sri Lanka, CPC handles the other 85%. LIOC does not have enough sales in Sri Lanka to justify leasing out all the  oil tanks in Trincomalee. If the LIOC  is allowed full sway over the tank farm, there would be nothing to prevent it from acquiring more sheds and tightening its grip.

For the past 14 years, LIOC has paid lease charges of US$ 100,000 for the tank farm in accordance with the agreement even though the lease deed had not been executed by the LIOC, said apologists.  The government cannot simply cancel the agreement. LIOC was paying us a substantial amount each year for use of the oil tanks.

Critics replied that  LIOC was paying Sri Lanka only a paltry rental. During the 15 year period it had controlled the oil tanks, the government had received Rs. 75 million as rental from the IOC and during the same period the Sri Lankan government had paid the IOC Rs 650 million for utilizing the same tanks to store oil being carried to the Jaffna peninsula during the war.   The US$ 100,000 p.a lease for all tanks in 850 acres is peanuts, said Ranjith Weerasinghe. We have individual professionals earning  more than that.

In 2017 , CPC trade unions renewed opposition to the deal.  They threatened to strike against the Memorandum. The trade unions said  that though they have been arguing that the agreement is illegal , their opinion had been brushed aside.

The unions had earlier pointed out  that the agreement was  no longer in force. In 2003  when CPC entered into a Memorandum of Understanding with Indian Oil Company, the MOU  was to be followed by a formal lease agreement to be signed within six months. But Indian Oil Company had failed to execute a proper lease agreement. Therefore,   the MOU became invalid after six months and India’s presence in the China Bay Tank Farm was  illegal.

The LIOC has been using the tanks illegally, on the payment of an annual amount to the Sri Lankan Government. COPE  also had agreed that there is no legal agreement to lease  the farm to India.  Therefore the ownership of the tanks remains with the government said the trade unions. Chairman of the CPC  supported the trade union argument. Supreme Court was petitioned   to declare that the China Bay Installations and the adjoining land held by the LIOC is illegal and arbitrary.

Petroleum officials  added that Lanka IOC   had violated  their  own agreement, as well. According to the  agreement, the LIOC is entitled to market only 1/3rd of 5% of total throughput via China Bay Tank Farm. The pricing formula for petroleum products is based on products being imported through the Colombo Port and marketed via the Common User Facility  of the CPSTL. Some of the costs included in the pricing formula  do not apply for operations through the China Bay Tank Farm and some costs are lower. For example Jetty and pipeline charges and Port Development Levy are not applicable to the China Bay Tank Farm. Several other items, disadvantageous to Sri Lanka  can be highlighted if necessary, said S. Talpahewa, Former Chairman/Managing Director, Ceylon Petroleum Corporation. (Island 25.4.17 p 9)

CPC engineers had for many years emphasized that the CPC  lacked storage facilities to maintain adequate stocks of fuel, including buffer stocks. Kolonnawa and Muthurajawela storage facilities are inadequate to meet the CPC’s entire storage requirement, which is progressively increasing as demand inches up. The storage tanks in Kolonnawa and Muthurajawela cannot store even a month’s supply of petroleum.   They can only store two week’s worth of oil, CPC said.

In September 2017 there was a startling petrol shortage, because an IOC consignment of fuel was rejected and a shipment for CPC from Iran was also delayed. CPC trade unions pointed out the urgent need to improve the  storage capacity of CPC  to hold buffer stocks. This is why we have demanded the return of tanks in the Trincomalee tank farm,”.

There are other  shortcomings too. The petroleum pipelines linking the Colombo port and Kolonnawa have corroded. Therefore, unloading of tankers is carried out only through one pipeline. Whenever the unloading delays, we have to pay high demurrage costs.

The CPC has also to cater to emergency power generation.  Ceylon Electricity Board (CEB) has to limit hydro power generation during droughts and increase power generation at the diesel power stations. But we don’t have facilities to maintain the  petroleum storage needed for this,” Chairman of CPC said. . Ceylon Electricity Board  engineers have also  drawn attention to the need for CPC to increase its storage capacity.

The tanks in China Bay are equal in capacity to Sapugaskanda. Each tank has a capacity of 27 million gallons (12,500,000 litres). The old machinery in the pump house is still in working condition, though the manufacturers no longer exist. If the Trincomalee  oil tank farm is fully utilized, a buffer stock of four months’ supply could be built up. The oil tank farm could also be used by Sri Lanka to build up buffer stocks of fuel when prices are low. When  we have 99 tanks of our own, why must we spend  public funds to put up new tanks,  asked Ceylon Petroleum Corporation

Ceylon Petroleum Corporation  has calculated that  if the distribution of fuel to the surrounding districts is done from Trincomalee instead of Kolonnawa using these tanks, the distribution cost of fuel could be reduced by Rs 618 million a year. It could save Rs. 900 million a year in transport, shipping and late fees, the unions claim.   It takes about two weeks to unload a shipment of fuel in Colombo, but in Trincomalee the operation can be completed in one week. Hence by using these oil tanks, the CPC could save over a Rs. one billion a year. That is much more than the rent paid by the LIOC to the Government. The use of the China Bay oil tank farm is urgently needed. (CONTINUED)

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