Sri Lanka’s new fuel administration seeks to end distribution rackets

EconomyNext.com – New management in charge of Sri Lankan petroleum utilities have recommended changes to shipments and storage and distribution, seeking to end manipulation that increased costs and caused inefficiency.

Officials of Ceylon Petroleum Storage Terminals Limited (CPSTL), a state-owned storage facility, told Power and Energy Minister Patali Champika Ranawaka that shifting shipments and new storage and alternative distribution methods could sharply reduce costs.

Mohamed Niyas, in charge of CPSTL’s oil tank farm in Muthurajawela, said diverting shipments of refined products to an offshore unloading terminal there could sharply reduce demurrage paid for delayed discharge at Colombo port, down the coast.

The petroleum utility now pays over 100 million rupees a year as demurrage.

The offshore terminal at Muthurajawela, just north of Colombo, also enables tankers to unload fuel shipments faster and at lower cost, he said Monday during a visit by Ranawaka to the facility.

"Ships unloading off Colombo port pay a levy 3.7 US dollars per tonne, so we can save on that levy by discharging off Muthurajawela," he told EconomyNext.com. "Altogether we can save about 200,000 dollars per ship."

Distributing fuel using the railway could also reduce the organisation’s distribution costs while reducing traffic congestion caused by fuel trucks in Colombo, he told Ranawaka.

CPSTL is also looking at developing alternative storage terminals in different parts of the island to make storage and distribution of refined product more effective and reduce costs.

Officials said owners of fuel truck fleets had manipulated distribution under the previous regime for their benefit and discouraged use of rail which is cheaper.