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No progress in cross-country pipeline

18 Jul 2021

By Naomi Wickremarathna The cross-country pipeline from Colombo Port to Kolonnawa, the absence of which has caused losses of millions of rupees to the country, is yet to make notable progress, with it still being at its procurement stage, The Sunday Morning Business learns. A Ministry of Energy spokesperson told us that the project is yet to be awarded to a contractor and added that he is unaware of the reasons for the delay in doing so.  The construction of a cross-country pipeline, which was launched in 2015, got a new lease of life last year after a report by the Auditor General revealed colossal losses caused by the absence of the said pipeline, and the Ministry stated it would launch a feasibility study and award the construction project. 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 uncovered that in mid-2015, a project to construct a cross-country pipeline from Colombo Port to Kolonnawa Terminal received Cabinet approval. However, work on the project had not commenced until now. When we contacted Energy Ministry Secretary K.D.R. Olga at the time, she stated that the Ministry was aware of the losses caused by the absence of the pipeline, and also the recent report by the Auditor General on this matter. “The Colombo Port to Kolonnawa Terminal cross-country pipeline project was being dragged out for years. But our Ministry is planning to complete it under this Government’s tenure. We are having a meeting pertaining to this project this week with the relevant authorities. We understand the losses caused by the lack of pipelines on this route,” Olga stated. Considering the dilapidated status of the existing – and only – active oil pipeline (12-inch) connecting the Colombo Port and 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 approved the construction of the project, and allowed to 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 Cabinet approval to implement the said project as a Government-to-Government (G2G) project, considering the dire need for this pipeline.  Accordingly, it was planned that 100% of the financing for 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. 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 the 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 2020, on which date China Petroleum Pipeline Engineering Co. Ltd. (CPPECL) on its website noted: “On 30 October, CPP received a letter of award from the owners of the Kolonnawa cross-country pipeline project in Sri Lanka.”


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