Financial Times

Bunkering resumes at former LMSL oil storage complex

By Bandula Sirimanna
The Sri Lanka Ports Authority (SLPA) has initiated new strategies to resume bunkering operations at its Bloemendhal Road oil storage complex without any delay after taking possession of the premises from Lanka Marine Services Ltd (LMSL), a subsidiary of John Keells Holdings, consequent to a Supreme Court decision.

The SLPA has entered into agreements through its Jaya Container Terminal (JCT) Ltd with Lanka IOC, Lanka Bunkering Services Pvt Ltd, Lanka Maritime Services Ltd, LMSL and three other bunkering service license holders for the storage and marketing of bunker fuel and lubricants. The MOUs were signed between these operators and JCT Ltd recently. A stock of 4,000 to 6,500 tonnes of bunker fuel will be stored at two tanks at the oil storage facility at the initial stage, a senior official of the SLPA said. However two tanks at the Bloemendhal Road oil storage complex had been filled with 2,500 tonnes of bunker fuel and arrangements have been made to resume bunkering operations in the next few days.

The JCT Ltd. Oil Bank, a fully owned subsidiary company of the Sri Lanka Ports Authority (SLPA) which took over the Lanka Marine Services Oil Facility received its first stock of Bunker Fuel Oil for storage. Within a very short period of 16 days since Lanka Marine Services vacated the premises in keeping with the recent order of the Supreme Court and within three days of signing of the agreements with the various Bunker Licence Holders, the JCT Ltd. Oil Bank has been able to accommodate their requests to allocate space within the tanks to store Bunker Fuel Oils.

One of the Bunker License Holders, M/S Lanka Maritime Services will be discharging a parcel of almost 6500 tonnes of Bunker Fuel oil at the facility for storage. The Tanker Nipaiya is expected to berth at the Dolphin Tanker Berth for this purpose.

LIOC Managing Director K. Ramakrishnan told The Sunday Times FT that they will start bunkering operations by mid next month. He noted that LIOC will store 8,000 tonnes of bunker fuel and they will share the bunkering facility with other licence holders in accordance with the MOU signed by them with the SLPA.

According to the MOU, ship bunkering licence holders, including LMSL, should share the facility, though capacity is likely to be uneven. Each operator will get only 3,700 tonnes storage space if all operators are treated alike. The SLPA official said that a stock of 15,000 tonnes of bunker fuel, including furnace oil to operate ship engines and gas-oil for generators is needed monthly. The 30,000 tonne facility can store about two months of current demand for ship fuel.

However shipping line experts questioned as to how many of these licence holders can afford to consistently buy Rs. 300 million worth of fuel every five weeks and also invest in barges costing Rs. 200 million plus large monthly vessel operating costs. They said that most of these operators will find it difficult to operate in the long run. Meanwhile SLPA plans to upgrade the pipelines from the tank farm to the port by December with a view to transform it to a multi-user enabled pipeline network facilitating several bunker operators.

Following the Supreme Court decision, new appointments were handed over to 177 employees of LMSL attaching them to JCT at a function held at the Mahapola Training Institute (MPTI) of SLPA recently. But the workers say that the terms and conditions of their appointments are yet to be finalized as the Secretary of the Labour Ministry Mahinda Madihahewa has told the trade union representatives that a final decision on their grievances including the demand to pay cost of living allowance entitled to SLPA employees will be taken after the LMSL case in the Supreme Court tomorrow.

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