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
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.
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
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
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.
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.
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.
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
It seems a
similar game is underway with Wickramanayake's attempt to enter
the gas market.
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.
attempts to use the Galle Port for LPG operations
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:
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."
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?
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?
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.
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.
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.
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.
'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.
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
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.
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?
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.
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).