Fuel supply: Crude oil tanker still offshore

An oil tanker carrying 99,000 MT of Eastern Siberia Pacific Ocean (ESPO) crude oil valued at approximately $ 80 million remains off the west coast of Sri Lanka for nearly 45 days, awaiting payment to unload its cargo, it is learnt.

Last month The Sunday Morning reported the risk of the dormant vessel racking up millions of dollars in demurrage.

Trade Union Leader Ananda Palitha from the Jathika Sevaka Sangamaya of the Ceylon Petroleum Corporation (CPC) claimed that such tanker vessels normally charged $ 150,000 per day in demurrage. As such, he estimates that the delays in unloading may cost the taxpayer more than $ 6.5 million.

When The Sunday Morning contacted CPC Chairman Mohamed Uvais Mohamed regarding the shipment, he confirmed that the vessel was at sea awaiting payment. 

However, the Chairman disputed the allegation made by Palitha, stating that details of how demurrage would be calculated for the shipment had not yet been negotiated.

Sri Lanka’s only oil refinery at Sapugaskanda remains closed due to the Government’s inability to make payments of past crude oil shipments and the vessel remaining offshore for more than a month and a half.

Responding to a question, the CPC Chairman pointed out that State enterprises such as the Ceylon Electricity Board (CEB) and the loss-making National Carrier SriLankan Airlines owed the fuel supplier millions of dollars in arrears.

He charged that had the monies owed been paid, the CPC would have been able to provide the banks with the necessary rupee equivalent to the dollar price of shipments, thereby securing Letters of Credit (LCs) to import crude oil, which would allow them to refine fuel locally.

“The tanker waiting offshore is carrying approximately Rs. 28 billion ($ 80 million) worth of crude oil. SriLankan Airlines has $ 300 million in arrears to the CPC. The power sector, the CEB, and Independent Power Producers (IPPs) owe the CPC approximately Rs. 100 billion. If I could recover these dues, I can line up crude oil shipments to keep the refinery going for months. Once a refinery is operational, it should be kept running without disruption to get the best value for money in fuel,” the CPC Chair told The Sunday Morning.

Attempts to contact the Secretaries of the Treasury and the Ministry of Power and Energy regarding the cash flow issues of the CPC and payments for crude oil imports, failed. 

It is reliably learns that a 35,000 MT shipment of octane 92 petrol is expected to arrive in Sri Lanka tomorrow (7) afternoon, while a 40,000 MT diesel shipment is expected on Tuesday (8). 

A shipment of Jet A1 fuel that has arrived is expected to be discharged today (6) subject to payment terms being honoured.