Ministry re-evaluates the project
Launched in 2015
The construction of a cross-country pipeline from the Colombo Port to the Kolonnawa Terminal that was launched in 2015 is expected to face further delays due to the new policies of the present Government, despite colossal losses caused by the absence of the said pipeline.
Speaking to The Sunday Morning Business, Ministry of Energy Secretary K.D.R. Olga stated that the Ministry is presently re-evaluating the project in the backdrop of new governmental policies such as no foreign borrowings and encouraging local procurements.
The current Government is of the view that for infrastructure developments, the country should attract investments instead of relying on foreign borrowings. As a result, a number of projects have been suspended in the recent past, including the establishment of Sri Lanka’s first-ever automated railway ticketing system, funded by the Asian Development Bank (ADB).
The cross-country pipeline was proposed to be implemented as a government-to-government (G2G) project and it was planned that 100% financing of the project on an engineering, procurement, and construction (EPC) turnkey basis would be obtained by receiving only one comprehensive proposal each from the US, China, India, and Malaysia upon the recommendations of the respective embassy/high commission.
In the midst of new policies of the Government, it is unclear whether this project too might face a similar fate like that of the automated railway ticketing system.
Nevertheless, the Auditor General recently revealed that the state-owned Ceylon Petroleum Corporation (CPC) paid about Rs. 488 million over the last five-year period to shipping companies as late fees. This was attributed to the delay in unloading fuel consignments at Sri Lankan ports due to the existence of only one active pipeline to transport fuel and insufficient fuel storage facilities.
The Sunday Morning Business in September this year uncovered that in mid-2015, the project to construct a cross-country pipeline from the Colombo Port to the Kolonnawa Terminal received the approval of the Cabinet of Ministers. However, work on the project had not commenced until now.
Considering the dilapidated status of the existing and only active 12-inch oil pipeline connecting the Colombo Port and the Kolonnawa Terminal, then Minister of Power and Energy Patali Champika Ranawaka in 2015 proposed the construction of a new cross-country pipeline on the same route.
On 17 June 2015, the Cabinet of Ministers approved the construction of the project and the call for international bidders for the project. With no significant development in the project reported during the interim period, on 10 May 2016, then Minister of Petroleum Resources Development Chandima Weerakkody obtained the approval of the Cabinet to implement the said project as a G2G project considering the dire need for this pipeline.
The Ministry of Petroleum Resources Development in its 2017 annual report stated that it co-ordinated all the activities of the project with the CPC and Ceylon Petroleum Storage Terminals Ltd. (CPSTL).
“Almost all the preliminary steps of this project such as the preliminary topographical surveys, geographical surveys, initial environmental examination, identification of most suitable (feasible) pipe-laying route, and provision for compensation and remedies to the affected parties have been completed. Now it is in the process of finding funds and selecting a suitable contractor to implement the said project in time,” the 2017 report added.
No major developments were reported in the project up until 15 November last year, on which date China Petroleum Pipeline Engineering Co. Ltd. (CPPECL) on its website noted: “On 30 October, CPPECL received a letter of award from the owners of the Kolonnawa cross-country pipeline project in Sri Lanka.”
Confirming the awarding of the tender to CPPECL, Ministry of Energy Secretary Olga in September noted that following the selection of a Chinese company last year, the project came to a standstill, citing that a feasibility study had not been done prior to awarding the tender.
“We are going to do a feasibility study and hand over the project to the same company that was selected. They have quoted a cost of $ 50 million. The selected party does not come with a funding agency. We have to find a source of funds through the Department of External Resources (ERD),” she stated at that point.
The existing three pipelines from the Dolphin Pier at the Colombo Port to the Kolonnawa Terminal were built in the 1940s for the transportation of petroleum products. Out of these pipelines, two were abandoned many years ago due to the inability to carry out maintenance and repairs as a result of illegal encroachment on the pipeline terrace by squatters. With only one pipeline left in a usable condition, repairs that might occur in the only pipeline would result in further delays in transporting fuel. 
