{"id":80383,"date":"2018-08-23T14:42:02","date_gmt":"2018-08-23T21:42:02","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=80383"},"modified":"2018-09-03T12:05:30","modified_gmt":"2018-09-03T19:05:30","slug":"yahapalana-as-a-wake-up-call-pt-3","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2018\/08\/23\/yahapalana-as-a-wake-up-call-pt-3\/","title":{"rendered":"YAHAPALANA AS A WAKE UP CALL Part 3A"},"content":{"rendered":"

KAMALIKA PIERIS<\/em><\/span><\/h2>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.\u00a0 The Deputy Minister of this ministry at that time was Bimal Ratnayake. The JVP Minister\u2019s Cabinet Paper bearing No: 05\/0036\/039\/002 dated 4 January 2005 stated the following:\u00a0“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.<\/p>\n

“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,\u201d continued the Cabinet paper.<\/p>\n

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.”<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.\u00a0In 2008 a Cabinet Appointed Negotiating Committee got the contract price fixed at USD 514 million.\u00a0Though 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.<\/p>\n

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.<\/p>\n

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.\u00a0One minister said that this situation had come about because I had wanted to divert water to Hambantota to irrigate land in my village.\u00a0 President Sirisena also stated that this project had been carried out due to \u2018political requirements\u2019.<\/p>\n

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.<\/p>\n

G.T. Dharmasena, former Director General, Department\u00a0\u00a0 \u00a0of 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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

People are blaming the Environment Impact Assessment (EIA) \u00a0\u00a0done before the project started. But this matter has nothing to do with the EIA.\u00a0 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.<\/p>\n

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. \u2018The whole thing has been hijacked by some political elements in order to rouse up the poor uneducated people in the Uva province,\u2019 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.<\/p>\n

Guwan Seeya\u201d has written to the newspapers, giving readers the history of Sri Lanka\u2019s national airline \u2018Air Ceylon\u2019.\u00a0 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\u201d.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

BOAC came in after KLM pulled out .BOAC\u2019s 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.<\/p>\n

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\u2019s 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.<\/p>\n

In 1979 Singapore Airlines came in. A brand new national airline,\u201d Air Lanka\u201d 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.<\/p>\n

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\u00a0 in these\u00a0 link ups,\u00a0 they \u00a0had to dance to the tune of their expatriate partners.<\/p>\n

An inquiry is going on at present over the current national airline, “Srilankan Airlines”.\u00a0 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.<\/p>\n

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 \u00a0there 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 \u2018hug the coast,\u2019 and take a longer route instead of the direct route. SriLankan maintenance has also lost European Aviation Safety Agency (EASA) certification.<\/p>\n

Phoenix Duty Free Services, had violated \u00a0both, its agreement and the Customs Ordinance. Phoenix was expected to obtain duty free items on behalf of SriLankan\u00a0and 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.<\/p>\n

Harry Jayawardena, who took over the airline after the exit of Emirates, had tried to introduce accountability and transparency, \u00a0but 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. \u00a0\u00a0Most of the officials were selected on the basis of family and political connections. \u2018We know this because they spoke of their connections openly.\u2019 If someone eligible was appointed, others would undermine him. Manoj Gunawardena, appointed CEO in 2009, had a clear vision, but he had been undermined.<\/p>\n

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\u2019s CEO prior to his performance appraisal, which was mandatory for his confirmation, Directors \u00a0agreed to this\u00a0 and Ratwatte was confirmed without an evaluation of his performance (Daily News 19.6.18 p 8). \u00a0Captain 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.<\/p>\n

There is now open discussion about the Trincomalee oil tank farm. As far as I \u00a0know, this is the first time that this issue has been aired so extensively and openly \u00a0in the public domain. The Trincomalee \u00a0oil tank farm and the\u00a0 involvement of the Indian Oil Company in the fuel distribution business came up prominently at the oral submissions made to the People\u2019s Commission to formulate a National Policy on International Trade and Treaties in 2017.<\/p>\n

Minister Susil Premjayantha \u00a0told 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\u00a0 oil tanks in Trincomalee and what they were after was not really the oil tanks but the land on which the oil tanks stand.<\/p>\n

Minister Premjayantha\u00a0 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 \u00a0oil 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<\/p>\n

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\u00a0 World War II, to provide diesel for Britain\u2019s\u00a0 South East\u00a0 Asia Command ships.\u00a0 Made of the best Manchester steel, 99 of these tanks, each with a capacity to hold 12,100 metric tons of oil\u00a0 remained in good condition. Britain retained ownership of this tank farm even after independence.\u00a0\u00a0 In 1957 Prime Minister S.W.R.D. Bandaranaike paid compensation of 250,000 Sterling pounds\u00a0\u00a0 and secured ownership.<\/p>\n

The tank farm has two sections identified as upper and lower farms. Lower tanks are situated on the seaside of the China Bay \u2013 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\u00a0 tanks are intact and \u00a0in 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\u00a0 , auto, \u00a0diesel or kerosene.<\/p>\n

India did not want a hostile power to get hold of Trincomalee. \u00a0India used the \u00a0indo-Lanka Accord of 1987, to gain control over Trincomalee . The\u00a0 Accord \u00a0contained annexures relating to Trincomalee harbour. The public\u00a0 were not told of these annexures at the time. These annexures\u00a0 barred other countries from using the Trincomalee \u00a0tank 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\u00a0 . The annexures \u00a0also stipulated that neither Trincomalee nor any other port could be used by a foreign power against India.<\/p>\n

The \u00a0UNP Government \u00a0had in 2002 planned to lease out 10 tanks to Singapore. This plan was abandoned in favor of India.\u00a0 A \u00a0tripartite agreement was \u00a0signed between the Sri Lankan Government, the LIOC and the CPC7 in \u00a0February 2003 \u00a0\u00a0leasing\u00a0 the Trincomalee\u00a0\u00a0 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. \u00a0India was to provide \u00a0its own security for the oil tanks, CPC employees staged protest demonstrations against this move but they were \u00a0ignored and the agreement was signed. IOC\u00a0 thereafter used 15 tanks \u00a0\u00a0in the lower section.\u00a0 One other tank was\u00a0 given to Prima.<\/p>\n

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.<\/p>\n

In 2012, LIOC applied to Sri Lanka\u2019s Board of Investment to set up a US$ 5.2 million bitumen handling facility in the upper tank farm. But approval was not granted. \u00a0\u00a0\u00a0The LIOC then \u00a0submitted other proposals to develop the upper tank farm\u00a0 but these were also refused.<\/p>\n

Once the\u00a0\u00a0 Yahapalana\u00a0 government\u00a0\u00a0\u00a0 came in, India \u00a0revived its push on the upper tank farm it wanted to \u00a0build \u00a0a modern tanker berthing and pumping facility to store bulk petroleum \u00a0to be transshipped to various parts of India. \u00a0IOC would extend the jetty to accommodate super tankers, since it had a\u00a0 draught of only 13 meters, \u00a0not enough to berth big tankers. India also agreed to first renovate 10 tanks in the upper farm for Sri Lanka\u2019s exclusive use \u00a0and expressed willingness to set up a joint venture.<\/p>\n

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.<\/p>\n

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 \u00a0drought.<\/p>\n

The proposal was approved on 6 December, 2016\u00a0 Lanka IOC pointed out that \u00a0there is an agreement between India and Sri Lanka and \u00a0negotiations\u00a0 will be needed. However,\u00a0 CPC engineers visited the China Bay oil tank farm on 15 December with the intention of implementing this Cabinet decision.<\/p>\n

When CPC engineers visited the China Bay Tank Farm to implement the Cabinet decision\u00a0 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.<\/p>\n

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<\/sup>, 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.<\/p>\n

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.<\/p>\n

Prime Minister Ranil Wickremasinghe\u00a0\u00a0\u00a0\u00a0 submitted a Cabinet memorandum\u00a0 on December 6, 2016 requesting the Cabinet to withdraw the earlier decision and\u00a0 give approval to hand over the China Bay Tank Farm to a joint venture between the CPC and the LIOC.\u00a0\u00a0 \u00a0SLFP 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.<\/p>\n

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.<\/p>\n

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.\u00a0 Yahapalana\u00a0 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.<\/p>\n

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?\u00a0 It is a crime\u00a0 to leave such an asset to the elements. India is not going to take the farm and run away.<\/p>\n

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 .<\/p>\n

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\u2019t the government do a joint venture with Sri Lankan companies? Why Indians, they asked. India was entering into this agreement to stop other countries\u00a0\u00a0 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.<\/p>\n

The new agreement was intended to fully legalize India\u2019s hold over this prime asset and the land it stands on. It would iron out any shortcomings in the 2003 agreement. \u00a0\u00a0\u00a0Further, up to now India only used the tanks in the lower level. Under the new agreement India\u00a0 gets 30 oil storage tanks in the upper level as well.<\/p>\n

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\u00a0 oil tanks in Trincomalee. If the LIOC\u00a0 is allowed full sway over the tank farm, there would be nothing to prevent it from acquiring more sheds and tightening its grip.<\/p>\n

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. \u00a0The government cannot simply cancel the agreement. LIOC was paying us a substantial amount each year for use of the oil tanks.<\/p>\n

Critics replied that\u00a0 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. \u00a0 The US$ 100,000 p.a lease for all tanks in 850 acres is peanuts, said Ranjith Weerasinghe. We have individual professionals earning\u00a0 more than that.<\/p>\n

In 2017 , CPC trade unions renewed opposition to the deal. \u00a0They threatened to strike against the Memorandum. The trade unions said \u00a0that though they have been arguing that the agreement is illegal , their opinion had been brushed aside.<\/p>\n

The unions had earlier pointed out \u00a0that the agreement was\u00a0 no longer in force. In 2003 \u00a0when CPC entered into a Memorandum of Understanding with Indian Oil Company, the MOU \u00a0was 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, \u00a0\u00a0the MOU became invalid after six months and India\u2019s presence in the China Bay Tank Farm was \u00a0illegal.<\/p>\n

The LIOC has been using the tanks illegally, on the payment of an annual amount to the Sri Lankan Government. COPE\u00a0 also had agreed that there is no legal agreement to lease \u00a0the farm to India. \u00a0Therefore the ownership of the tanks remains with the government said the trade unions. Chairman of the CPC \u00a0supported the trade union argument. Supreme Court was petitioned\u00a0\u00a0 to declare that the China Bay Installations and the adjoining land held by the LIOC is illegal and arbitrary.<\/p>\n

Petroleum officials\u00a0 added that Lanka IOC \u00a0\u00a0had violated\u00a0 their \u00a0own agreement, as well. According to the\u00a0 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\u00a0 of the CPSTL. Some of the costs included in the pricing formula\u00a0 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\u00a0 can be highlighted if necessary, said S. Talpahewa, Former Chairman\/Managing Director, Ceylon Petroleum Corporation. (Island 25.4.17 p 9)<\/p>\n

CPC engineers had for many years emphasized that the CPC \u00a0lacked 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. \u00a0\u00a0They can only store two week\u2019s worth of oil, CPC said.<\/p>\n

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.<\/strong> CPC trade unions pointed out the urgent need to improve the \u00a0storage capacity of CPC\u00a0 to hold buffer stocks.<\/strong> This is why we have demanded the return of tanks in the Trincomalee tank farm,\u201d.<\/p>\n

There are other\u00a0 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.<\/p>\n

The CPC has also to cater to emergency power generation.\u00a0 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 \u00a0petroleum storage needed for this,” Chairman of CPC said. . Ceylon Electricity Board \u00a0engineers have also \u00a0drawn attention to the need for CPC to increase its storage capacity.<\/p>\n

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\u00a0 oil tank farm is fully utilized, a buffer stock of four months\u2019 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 \u00a0we have 99 tanks of our own, why must we spend\u00a0 public funds to put up new tanks,\u00a0 asked Ceylon Petroleum Corporation<\/p>\n

Ceylon Petroleum Corporation \u00a0has calculated that\u00a0 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.\u00a0 \u00a0It 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)<\/p>\n","protected":false},"excerpt":{"rendered":"

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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[104],"tags":[],"class_list":["post-80383","post","type-post","status-publish","format-standard","hentry","category-kamalika-pieris"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/80383","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=80383"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/80383\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=80383"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=80383"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=80383"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}