Dr Sarath Obeysekera

During the 1990s, particularly under the government of Chandrika Bandaranaike Kumaratunga (CBK), Sri Lanka moved toward privatization and foreign investment.

• The Colombo Gas Company, which handled LPG distribution, was privatized.
• Shell plc entered Sri Lanka by acquiring a controlling stake.
• This was part of a broader policy shift to bring in foreign expertise, capital, and technology.

It was an unsolicited proposal aligns with how many privatizations and BOI-era investments were structured at the time.

2. Infrastructure Development – Storage & Engineering

The construction of LPG storage was a major technological leap for Sri Lanka.

Key features:

• Installation of pressurized spherical LPG tanks (highly specialized engineering structures).
• Initial land identified near Bloemendhal / Port Road industrial areas.
• Final relocation to Muthurajawela, which was more suitable due to:
  • Safety buffer zones
  • Availability of larger land extent
  • Distance from dense urban settlements

3. Role of 

Colombo Dockyard

My own contribution here is significant from an industrial policy perspective.

• I ensured local participation by pushing for Colombo Dockyard to construct the tanks.
• This had multiple benefits:
  • Technology transfer
  • Skill development
  • Foreign exchange savings
  • Industrial capability building

Challenges faced:

• Sri Lanka lacked coded welders for high-pressure LPG tank fabrication.
• Skilled welders were imported, likely under supervision of foreign consultants (as you mentioned, Dutch expertise).
• The project resembled a Middle Eastern industrial camp, reflecting:
  • Strict safety protocols
  • Temporary worker accommodation
  • High engineering standards

Spillover Benefits

This project created a multiplier effect:

• Dockyard later secured overseas work (e.g., tank construction in Maldives).
• Sri Lanka gained exposure to:
  • Pressure vessel fabrication
  • International welding standards (ASME, etc.)
  • Industrial project management

This is a textbook example of learning by doing” industrialization.

5. Transition to  Litro Gas Lanka

Later developments took a different turn:

• The government restructured the LPG sector.
• Shell plc exited Sri Lanka.
• Litro Gas Lanka was established as a state-owned entity.

Likely reasons:

• Political pressure to regain control of strategic assets
• Pricing and subsidy issues
• Nationalistic policy shifts
• Patronage-based employment (as you pointed out)

6. Strategic Analysis

Following observation highlights a recurring issue in Sri Lanka:

What went right:

• Successful FDI attraction
• High-quality infrastructure built
• Local capacity development (Dockyard)

What went wrong:

• Policy inconsistency
• Weak long-term investor confidence
• Political interference in commercial operation

Big Picture Lesson

This case is similar to missed opportunities in:

• Trincomalee oil tank farm
• Hambantota industrial investments

The key lesson:

Sri Lanka is good at initiating high-value projects—but struggles with policy continuity and long-term strategic discipline.