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Hambantota bunkering: Two big loss- making ventures also in the running
View(s):By Namini Wijedasa
Two loss-making Government ventures are among those which have submitted bids to carry out bunkering operations at the Hambantota oil tank farm. Bids were submitted for bunkering by the Ceylon Petroleum Corporation (CPC) and Ceylon Petroleum Storage Terminals Ltd (CPSTL) as well as Adani Bunkering and the John Keells Holdings-World Fuel Services joint venture.
Based on what is in the public domain, the CPC and CPSTL do not meet the minimum qualification criteria on their own, despite bidding as such, an industry source said. “It also defies logic that Government corporations, particularly those running at a loss, would bid to take over other Government assets,” he said.
Meanwhile, six bids were also submitted for other business ventures at the Port of Hambantota. It is now six years since Phase I of the Hambantota Port was opened. April 2016 marked the third occasion on which the Government called for proposals for business ventures in Hambantota. To date, however, not a single initiative has been set up. Consequently, the only revenue that the Port derives is from vehicle carriers that have been moved there from Colombo.
Proposals had been requested for other businesses by the Ministry of Ports and Shipping. Accordingly, Ace Distriparks-Aitken Spence of Sri Lanka has bid to set up a warehousing facility; Pyramid Wilmar of Sri Lanka has bid for sugar refining and Gunvor Group of Singapore has bid for liquefied natural gas (LNG) transshipment and distribution.
Also, JKH and Fortrec, a Sri Lankan and Singapore joint venture, have bid for a petrochemical tank terminal; Lucky Cement of Pakistan has bid for cement manufacturing and Hayleys Advantis and NYK of Sri Lanka have bid for a roll on-roll off terminal.
“The Government should kick-start some activity there which, in turn, will help stimulate further interest in Hambantota and create momentum which is woefully lacking at present,” the source said.
The bunkering terminal at Hambantota was built at an exorbitant cost, well over industry norms. However, it appears to be a well-constructed, world class terminal, the industry source said. “Leaving it idle is a criminal waste,” he added.
The previous Sri Lanka Ports Authority (SLPA) Chairman Priyath Bandu Wickrama lost more than US$16 million in an ambition to turn SLPA into a bunker supplier and trader. The Unity Government, within a month of coming into power, shut down the bunkering operation in February 2015.
“The new Government has had 18 months to do something with an asset that is sitting idling, and probably perishing in the process, while incurring massive debt repayments on it with zero income,”a private sector source said. “The Government should evaluate the conforming bids received to establish whether there is an option that will, at least partially, address the debt repayment problem.”
“Reviewing the proposals received, including for bunkering, will give the Government some leverage with whomever the Chinese parties are reportedly negotiating the handover of the entirety of the Hambantota Port and Free Trade Zone,” he pointed said.