Petroleum: Another crisis after another

BY Shonel Perera

The petroleum crisis in Sri Lanka during the past few days had the country go wild with vehicles filling up the sides of streets and causing much chaos across the country.

 

No one, however, knew the real reason behind the issue that had the country on it’s toes.

 

Sources say that a shipment of Fuel belonging to the Indian Oil Corporation was brought into Sri Lanka on October 15 and that the shipment was supposed to be the next batch of refills for fuel stations across the country.

 

However, the shipment was rejected as it was not of proper, suitable standards for distribution.

 

“a shipment of fuel imported by Lanka IOC, proved to be of substandard quality and was therefore not unloaded” – statement by Arjuna Ranatunga – the Minister of Petroleum Resources Development.

 

However, there was a PLAN B in place, which was a fuel shipment belonging to the Ceylon Petroleum Corporation. This shipment was set to arrive in the country on the 3rd or 4th of November. Unfortunately for the country, that plan fell apart with reports which said that the ship will only arrive in Sri Lanka on the 8th or possibly 9th of November. Due to this reason, the supply of petrol to fuel stations across the country.

 

Minister Arjuna Ranathunga had said that the ministry was capable of supplying 80% of the requirement, However, according to Petroleum Trade Unions, only 10,000 metric tonnes of fuel remain in the reserves. On a daily basis, the country needs around 4000-5000 metric tonnes of fuel!.

 

There have been fuel shipment rejections in the past. But there was no fuel shortage which followed the

 

According to sources, the subject minister holds a discussion with the relevant officials every week to understand and ascertain the fuel requirements of the country.

 

The purchasing of fuel was being done as per a long term process during each quarter, however a cabinet paper had been presented to seek permission to go into spot purchasing after canceling the tender procedures that were followed over a long period of time.

 

According to what the ministry says, there will be no spot purchasing done for fuel but even if fuel purchasing is done through spot purchasing, the ship carrying the fuel will take 2 to 3 weeks to arrive in the country.

 

By this time the fuel cargo ordered by the CPC would have arrived in the country.

 

 

The past few days were rough for the country but, there were certain fuel stations which were receiving fuel. There were some others which had queues leading all the way out of the gas station extending over 100 meters down streets. However, there were stations carrying “No Petrol” signs as well causing grieve to many drivers across the island.

 

On the 3rd of November, Reports of a petrol shortage first emerged and rumorssparked of a shipment of fuel which was rejected.

 

The rumor was then later confirmed and Sources said that a Lanka IOC fuel shipment was rejected due to substandard quality.

 

On the 4th of November, Subject Minister Arjuna Ranatunga issued a media release as the shortage intensified where the minister called on the general public to use petrol economically during this issue.

 

Another report said that there is a tanker carrying a fuel order placed by CEYPETCO. This shipment was due to arrive on November 3rd or 4th. However, it was the shipment that arrived during the previous days.

 

On the 6th of November the Petroleum trade unions say that the fuel tanker purchased from Saudi Arabia will arrive in the country within two days which was the 8th.

 

Later on, The subject Minister Arjuna Ranatunga had noted that Ceylon Petroleum Corporation reserves could be utilized until Tuesday the 7th of November.

 

On the night of the 8th of November, Fuel tanker ‘Neveska Lady’ carrying 40,000 metric tons of fuel arrived in the country.

 

Secretary of the Ministry of Petroleum Resources Development, Upali Marasinghe, said the quality test of the fuel had commenced following the arrival of the shipment and it proved successful in its testing.

 

The distribution of fuel to filling stations will began on Thursday afternoon..

 

Secretary to the Ministry, Upali Marasinghe, said the ministry has also sought police security to ensure secure distribution of fuel across the island.

 

Thereby, police security was provided to all fuel stations including the Muthurajawela filling station.

 

All Employees who were on leave were asked to report to duty by the Ceylon Petroleum Corporation.

 

Meanwhile, a fuel tanker carrying 15,000 metric tons of petrol is also expected to arrive on a Saturday the 11th of November as well.

 

Accordingly, it was reported that the fuel shipment from both of these two ships would be adequate for the next 20 days.

 

However, Given the time taken for distribution, the fuel shortage will likely go on till the 11th of November.

 

In a more developing story, Minister Arjuna Ranatunga’s Press Briefing on the 6th of November revealed that someone wanted Minster Ranatunga to accept the rejected fuel stock and have it set for distribution.

 

The Minister revealed at the press brief that certain individuals, politicians and businessmen attempted to pressure / influence the minister into accepting the substandard oil shipment which was rejected.

 

He also said that he was offered money to do so and added that he rejected all attempts.

 

Meanwhile the minister said all fuel stations have been informed to carryout fuel distributions without any interruption.

 

He also said that legal action will be taken against filling stations which say they do not have fuel while in possession of fuel.

 

The minister finally noted that an investigation will be launched to track down the source of the SMS alert which caused the panic.

 

Min. Ranatunga also pointed out that the tanker carrying substandard oil is still anchored at the Trincomalee harbor.

 

According to the Managing Director of LIOC, their fuel shipment met the chemical specifications but was rejected “because of the impurities in the petrol”.

 

“There were some impurities in the visibility, so appearance was not meeting the expectations, that is why it was rejected.” MD Shyam Bohra said.

 

Bohra said that the shipment was from French multinational oil company ‘TOTAL’.

 

He also said that it is the supplier’s responsibility to replace the cargo. And when LIOC requested for a replacement, TOTAL wanted one more chance to test the product again.

 

“So that product was also tested and it was rejected again.”

 

Shyam Bohra told media that LIOC decided to spot tender immediately and that a new shipment may be available on the 10th of November.

 

“If they don’t replace the product, we will take legal action against TOTAL.”

 

Bohra said: “They we will have to give the guarantee for taking it out of Sri Lankan waters. I cant comment why the ship is anchored there, because as far as we are concerned we have rejected the ship. They will have to get the Customs or Port permission to get out from this place.”

 

According to All Island Port General Services Union Chairman Sarath Gallage, there is another vessel anchored close to the ship carrying substandard fuel.

 

According to satellite date, the Hong Kong based ‘UNIQUE DEVELOPER’ vessel arrived in Trincomalee around October 30.

 

In a move that will further deepen the prevailing fuel crisis, the Lanka Indian Oil Company (LIOC) is reported to be planning to increase fuel prices within the next few weeks if the government fails to remove the special taxes imposed over the years on fuel.

 

Reliable petroleum sources told media that the LIOC was selling petrol at a loss of Rs.22 on a litre while it was losing Rs.16 on a litre of diesel. “The reason for these losses was because of the special tax of 13% imposed earlier on a litre of fuel. Even the Ceylon Petroleum Corporation has to pay these taxes but that money goes back to the government coffers. So it is not a loss for either the Ceylon Petroleum Corporation (CPC) or the Ceylon Petroleum Storage Terminal Limited (CPSTL) but only to the LIOC,” sources said.

 

They said LIOC officials recently met Finance Minister Mangala Samaraweera and other top-level government officials and an assurance given when they requested that this tax be removed. “In the event the taxes are not removed as promised, the LIOC Board of Directors will take decision to go ahead with the planned increase. The LIOC cannot sustain itself any longer with the staggering losses it is incurring. Either the government should remove the taxes or increase fuel prices to avert further losses,” a source said.

 

Crisis after crisis. What next for Sri Lanka?!