ECONOMYNEXT - Sri Lanka's state-run petroleum distributor has awarded a deal to Indo East Engineering Construction (Lanka) Pte Ltd, to build a 15,000 cubic metre capacity tank to store fuel, as part of an effort to boost domestic storage.
Sri Lanka ran into a petrol shortage soon after new Petroleum Minister Arjuna Ranatunga took over, following a series of miss-steps and decisions that came one after another, despite having over two weeks of storage.
Attempts were made to blame Lanka IOC, a unit of Indian Oil Corporation for the shortage, but the second firm has about 20 percent of the market.
At the moment there is about 90,000 metric tonnes of storage for petrol, officials had said earlier.
In a note to cabinet Petroleum Minister Ranatunga had said another 100,000 metric tonnes of storage is needed for refined fuel.
Indo East Engineering & Construction (Lanka) Pte. Ltd will be paid 412.5 million rupees (without taxes) to build the extra tank.
Having bigger storage will allow CPC to purchase bigger parcels, which can cut costs, but idle stocks as well as well as the capital cost of tanks will drive operations costs up.
It is not clear whether a study was conducted to find out how much storage is needed to efficiently run the distribution operation. (Colombo/Nov23/2017)