The long wait for Mundo Gas

It is many moons since Mundo Gas and its combative chairman Ariyaseela Wickramanayake promised us liquid petroleum gas much cheaper than that supplied by the multinational Shell whose frequent and sometimes exorbitant price hikes angered consumers. Many promises have been made and numerous excuses given and consumers are still waiting. Meanwhile, the price at which Wickramanayake promised us gas has been raised many times. Mundo Gas must rank as the only, or one of the few, commercial enterprises to announce it was increasing the price of its product even before putting it on the market. And the product still does not appear to be on the market despite much accompanying publicity.

The company's long-awaited and much-postponed launch was heralded with much fanfare at Galle harbour a few weeks ago at a grand ceremony at which Mundo cylinders were distributed. Sometime before that the barge that is supposed to supply gas sailed into Galle in a blaze of publicity. Even before these developments Mundo Gas' assertion that it will fill cylinders supplied to consumers by its competitors had itself become a controversial issue with its rivals threatening to take it to court.

What appears to be taking place now is much more serious with many disturbing questions being raised about the lack of basic safety standards and the violation of international laws that could have frightening implications for Sri Lanka's reputation in the world of maritime commerce.

A crucial question is whether or not there is gas in the barge that Mundo has brought into Galle. As we have reported elsewhere in this newspaper Mundo has declared to the Customs that the barge is empty. But other officials have claimed the barge has gas and dockers at Galle have reported the familiar smell of gas after the barge master reported a leak.

If indeed the barge has gas then the question is whether Mundo has complied with the required safety precautions. If the company has made a false declaration to circumvent safety rules and high insurance costs should not the vessel be arrested and its owners and operators charged? Then there is the question of a government ministry spending public funds to promote the product of a private company, which smacks of favouritism.

Mundo, the Commerce Ministry and Minister Ravi Karunanayake must come clean and explain to the people whether or not the company has started selling gas to consumers and whether it is complying with safety and other legal requirements.

Something certainly fishy seems to be going on given the reluctance of port officials to comment about the operation of Mundo and contradictory statements reportedly given by different sources.

Wickramanayake deserves praise and support for being a local entrepreneur who is trying to enter a field dominated by a multinational and his maritime achievements, particularly in underwater construction and salvage, are laudable and need to be recognised.

In fact, he is one of the few 'shipping tycoons' this country can boast of.

Unfortunately, he has a penchant for making exaggerated claims and circumventing the rules - as shown by his recent attempt to get his ships exempted from the Merchant Shipping Act, an attempt that eventually embarrassed Shipping Minister Rauf Hakeem and forced him to rescind the gazette exempting Master Divers' foreign-flagged vessels from the Act under which only Sri Lankan-flagged vessels are allowed to trade in Sri Lankan waters.

It seems a similar game is underway with Wickramanayake's attempt to enter the gas market.

No businessman, no matter how successful he is or however high his connections might be, can be allowed to break the rules or hoodwink the public. The government also has a lot of explaining to do on this issue.

Anarchic attempts to use the Galle Port for LPG operations

Dr. Asoka N. Jinadasa, Industry Analyst
The current state of anarchy and lawlessness in our LP Gas industry is clearly illustrated in the story behind a front-page news item appearing in the Sunday Observer of 23rd March:

"Mundo Lanka (Pvt) Ltd Chairman, Ariyaseela Wickremanayake, told the Sunday Observer on Friday that the barge now docked in Galle Port was 'half full' with a stock of Mundo meant for the local market. Harbour Master Athula Hewavitharana told the Sunday Observer that the barge was not carrying any LPG stocks, which was why the Galle Port authorities did not have special safety precautions. Galle Port official's allegation was, however, dismissed by the Mundo spokesman who pointed out that these officials do not have access to the consignment in the vessel."

In the mandatory 'Declaration of Dangerous Substances and Articles Packages Goods' filed for the vessel 'Barge Formentera' before its arrival at the Galle harbour, 'NIL' has been declared under all headings for all specified groups of dangerous substances including Group 2 which specifically covers LPG. Moreover, this mandatory declaration dated February 13th includes the signed attestation: "We (Company), Master Divers, as owners for 'Barge Formentera' hereby make this declaration and certify that the mentioned facts are true and correct."

Clearly, someone is lying about the contents of the barge now berthed at the Closenburg jetty at the Galle Port. Is the barge empty of LPG as officially attested by Master Divers, or is it half-full of LPG as claimed by the Chairman of Mundo Gas, who also happens to be the Chairman of Master Divers?

The truth was revealed when the Master of 'Barge Formentera' informed the Assistant Harbour Master that there was a gas leak in the barge.! Recently port workers complained of the smell of LPG in the area around the barge at the Closenburg jetty.

In the absence of political interference, the procedure to be followed when such a suspect situation arises is to arrest the vessel for making a false declaration, and ask the agents for the vessel for an explanation. However, in this case, the vessel has not been arrested, and the sub-agent of the barge, Don Windsor Reef Navigation, has not even responded to the request by SLPA to declare the true position with respect to the contents of the barge. What will the Ministry do now in view of the fact that the private company they have publicly promoted has brought LPG into the Galle harbour illegally, by making a false declaration?

Another important question is how Mundo Gas managed to get their barge permanently berthed at the Closenburg jetty without assurances of compliance with safety requirements and without any lease agreement with the SLPA for an appropriate commercial fee? Is the right to bypass established administrative procedures yet another benefit of the high-level political patronage enjoyed by Mundo Gas?

Did Mundo Gas illegally bring LPG in their barge knowing that port officials would not have access to the consignment in the vessel, as they have brazenly declared in their above media statement? Does the fact that Mundo Gas and Master Divers have the same Chairman suggest a conspiracy to hoodwink the Galle Port authorities and bypass safety procedures that should have been laid down by the Sri Lanka Ports Authority (SLPA)? Did Master Divers knowingly make a false declaration to avoid paying customs duties on the LPG contained in the barge, and to avoid all the safety problems and the high insurance premium associated with bringing LPG officially into the Galle port?

The final result is that a barge containing LPG, which is a hazardous material, is presently berthed at the Closenberg Jetty in the Galle harbour without adequate safety precautions. What measures have the Galle port authorities taken to ensure port safety? For example, since the barge is not self-propelled, is a dedicated tug standing by at all times to move the barge out of the port in the event of an emergency or bad weather? No measures have been taken to stop all activities within 200 meters of the barge, where ignition sources (including mobile phones) may ignite LPG vapour during a leak (as has already been reported) or during venting and transfer operations. For example, Holcim Lanka are unloading clinker shipments alongside 'Barge Formentera', using normal machinery which could become ignition sources due to sparking. Does Holcim Lanka know that their ships and lorries are at risk? In case of an accident, who will indemnify the victims against possible damage and injury or loss of life and property?

IMO safety rules
Sri Lanka is a member country of the International Maritime Organization (IMO). However, SLPA still hasn't implemented all the safety procedures based on IMO's recommendations on the safe transport of dangerous cargoes (such as LPG) and related activities in port areas. That's why Mundo Gas is planning to use their barge berthed alongside the Closenberg Jetty as a stationary LPG storage facility with a total capacity of almost 5,000 cubic metres. According to their plans, vessels will discharge LPG into the barge, and filling up cylinders will be done at the adjoining No. 1 warehouse.

IMO regulations do not permit the filling of cylinders within the port, discharge of LPG from vessels to road tankers within the port, or the operation of floating storage vessels within ports that are not currently certified to be in line with IMO recommendations. IMO regulations only permit the discharge of LPG vessels, with required safety measures as per SIGTTO (Society of International Gas Tanker and Terminal Operation) recommendations, through a pipeline to on-shore storage tanks located a safe distance away from the port, using gantries or approved marine hoses.

Stationary barges cannot be used for storing LPG within a commercial port, unless the jetties are suitably located and designed for the safe handling of hazardous material. An LPG cylinder-filling plant cannot be operated at all within commercial port premises. These IMO regulations clearly demand a dedicated gas terminal situated away from commercial ports and populous urban areas such as Galle. The Closenburg jetty at the Galle port and the adjoining No. 1 warehouse to be used for storing LPG and filling cylinders are clearly unsuitable for the operations intended by Mundo Gas. If these were to be used for the above purposes, they need to be redesigned for handling hazardous material and should be for the exclusive use of Mundo Gas. For example, at the Colombo port, the Dolphin Pier is used for operations involving hazardous material such as petrol, diesel and kerosene since it is at a safe distance from the port premises.

Instead of implementing IMO regulations, SLPA evaluated the risks involved in the proposed LPG operation, and requested the owner of the LPG storage barge and the operator of the filling plant in the No. 1 warehouse at the Galle port to provide P&I (protection and indemnity or marine liability) insurance for an initial value $ 2 million per accident/incident to cover the associated risks including damage to port property. Once the filling plant is fitted out in the No. 1 warehouse as planned, the entire installation is to be valued and insured against personal injury to port employees and users arising from any incident, damage to port property and third parties.

However, since 'Barge Formentera' is officially considered to be empty at present, SLPA has decided to accept a P&I insurance cover of only Rs. 2 million per accident/incident submitted by Mundo Gas. This is only about one-hundredth of what it should have been if the barge were to contain gas, which it clearly does.

In case of an accident, who will pay damages for injury or loss of life and property, which could easily add up to well above the insured amount since cement ships are unloading their cargo right next to the barge?

Why do member countries implement the safety measures recommended by the IMO? LPG is an inherently hazardous material that could cause great damage to life and property.

Statistics involving gas-carrying vessels show that the risk of a serious accident is greater when the ship is in port than when at sea. For example, according to an Internet report, an explosion aboard an LPG tanker M/T Mundogas Europe docked at Subic Shipyard in the Philippines killed five people in December 1997.

A shipyard statement had said that the vessel was being prepared for undocking when an explosion occurred in a cargo tank, clearly indicating the hazardous nature of the product. Therefore, the ship/shore interface during berthing, at the berth and transfer operations has to be carefully designed to minimise danger to life and property, with special attention paid to safety features such as:

1. The berth's safe position regarding other marine traffic.
2. The berth's safe position in relation to adjacent industry.
3. Jetty-based marine loading arms.
4. Elimination of nearby ignition sources.
5. Safety distances between adjacent ships.
6. Emergency shut-down systems, including interlinked ship/shore control.
7. Systems for gas-leak detection.
8. Development of emergency procedures.
9. Fire-fighting equipment both on board and on shore.
10. Safeguards against environmental and marine pollution.

All such safety procedures have to drawn up by a competent authority approved by the IMO and implemented before commencing LPG discharge operations at the Galle port. This has not been done even though Mundo Gas, the Ministry of Commerce and Consumer Affairs, and government media have all announced that Mundo is about to start delivering LPG from the Galle port.

Furthermore, approval has to be obtained from the Central Environmental Authority. Why hasn't the SLPA initiated this important process? Is the SLPA exempting the planned Mundo Gas operation from such mandatory requirements?

Port disaster in the offing?
The SLPA is reeling from the embarrassment of having dangerous cargo in the form of toxic chemicals brought into the Colombo Port without their knowledge. There again, in the mandatory 'Declaration of Dangerous Substances and Articles Packages Goods' filed for the vessel L/T Grand, 'NIL' had been declared under all headings for all specified groups of dangerous substances. SLPA have been aware of what Mundo Gas intends to do with another dangerous cargo, LPG, at the Galle port. But, they still haven't implemented the necessary procedures to ensure safety, environmental protection and marine pollution prevention, even though the SLPA Chairman has affirmed that they are operating under IMO recommendations. The SLPA will not be able to claim ignorance this time, if a major accident does occur at the Galle port.

Looking at the bigger picture, how realistic is our goal of making Colombo Port a regional hub? "In the event of a prolonged war and the imposition of war risk premia in Middle East ports, major shipping lines may consider Colombo as the regional hub and divert ships here," says Mr. Maxwell de Silva, President of the Chartered Institute of Shipbrokers, in a recent media statement.

Will this ever happen? Even though Sri Lanka is a member country of the IMO, we still haven't implemented IMO regulations. As a result, we are not in the list of IMO member countries that implement the International Maritime Dangerous Goods (IMDG) Code, while all our neighbours such as India, Pakistan, Malaysia, Singapore and the Philippines are on it. This puts Sri Lankan ports at an immediate disadvantage.

If, in addition, we start disregarding IMO safety procedures for short sighted or politically motivated reasons, and a resulting explosion causes damage to life and property, all major shipping lines would stay away from our ports.

The net result in terms of ruined image, lost business and increased insurance premiums wouldn't be very different from the aftermath of a terrorist attack.(Note: this article was written a few weeks before Mundo Gas announced it has begun selling LPG in Sri Lanka).


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