- CPC’s fuel storage capacity limited
As Sri Lanka struggles to expand its petroleum storage capacities, the State-run Ceylon Petroleum Corporation (CPC) has suggested that the US-based RM Parks and the Australian-based United Petroleum (UP) be encouraged to invest their local earnings in establishing their own storage facilities in the country.
The two international players were previously shortlisted by the Government to commence operations in Sri Lanka.
Speaking to The Sunday Morning, CPC Chairman Saliya Wickramasuriya said that once RM Parks and UP commenced retail operations, they would initially use the same storage on a co-sharing basis.
However, he added that they were being encouraged to use their Sri Lankan Rupee earnings to invest in their own storage as well as enhanced retail offerings like lubricants, mini-marts, charging stations, etc.
Last month the CPC confirmed the entrance of the third international player, US-based RM Parks, into Sri Lanka’s petroleum market.
China-based Sinopec was the pioneer, signing in on 22 May, followed by RM Parks Inc. in collaboration with Shell on 8 June.
The long-term contracts focus on the importation, storage, distribution, and sale of petroleum products within Sri Lanka.
Meanwhile, Australian-based UP, signing agreements with the CPC on 8 June, has not specified a definitive date for commencing operations in Sri Lanka, and the finalisation of agreements with the CPC remains pending.
Presently, the local fuel business is primarily operated by Chinese and Indian companies, alongside the CPC.
Sinopec uses the storage facilities available with Ceylon Petroleum Storage Terminals Ltd. (CPSTL) and the Lanka Indian Oil Company (LIOC) utilises the storage facilities at the Trincomalee Oil Tank Farm.
A special audit report on the storage and distribution of petroleum in Sri Lanka, conducted by the National Audit Office (NAO), has shed light on the critical need for enhanced storage and distribution facilities.
The report highlights that the current fuel storage capacity in the country equates to the requirement of diesel for 27 days, petrol for 24 days, kerosene for 29 days, and aviation fuel for 40 days. However, to maximise the use of these capacities, all tanks should be filled at the time of import.
The report further reveals that the buffer stock available in the country for use in an emergency only covers the fuel requirement for a relatively short period.
Considering the expected gradual increase in fuel demand in the upcoming years, the existing fuel depots will be insufficient by 2026.
The projection is for diesel to last 21 days, petrol 21 days, aviation fuel 27 days, and kerosene 23 days, potentially affecting fuel supply within the country.