CPC to build new storage facility at Hambantota Port
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At the signing ceremony of the MoU, Johnson Liu, CEO of Hambantota International Port Group (HIPG) and Sumith Wijesinghe, Chairman of the Ceylon Petroleum Corporation. Minister of Energy Udaya Gammanpila was also present at the event.
The Ceylon Petroleum Corporation (CPC) signed a Memorandum of Understanding with the Hambantota International Port Group (HIPG), last week to develop Hambantota Port as a strategic energy centre in Sri Lanka. The signing ceremony was held at the Ministry of Energy, with top officials of CPC and HIPG participating, HIPG said in a media release.
A separate storage terminal with associated facilities for both domestic and export purposes connected to the port via a pipeline is to be established by the CPC, about 15 km away from the port. CPC, the state entity which provides the majority of petroleum products to local consumers, has identified a land area of approximately 50 acres owned by the Sri Lanka Mahaweli Authority for the project. The new facility is expected to expand storage and bulk distribution facilities of CPC.
The existing storage facility of CPC and its subsidiaries are sufficient to store refined petroleum product requirements of the entire country for a period of only one month, a capacity below the requirements of ensuring the energy security of the country. CPC currently imports refined petroleum products to cater to, approximately, 70 percent of the country’s demand via the Colombo port and suburbs. CPC has identified the need to increase its fuel storage capacity to cater to at least three months of the country’s demand.
“The growing demand for fuel in the past, combined with the country’s anticipated development in every aspect, has resulted in the opening up of opportunities for investors to establish ventures in Sri Lanka. In this context, CPC’s product portfolio has to be managed to suit the energy mix of the country if we are to be competitive, especially in comparison with other energy sources. The partnership with HIPG will increase the storage facility of CPC to the expected capacity; thereby the impact of global fuel price fluctuations can be mitigated and it will drive CPC to minimise and save additional foreign currency outflows. Apart from that, setting up in the Hambantota Industrial Zone, away from the traffic congestion of the country’s most residential cities, will make it an environmentally-friendly terminal,” said CPC Chairman Sumith Wijesinghe.
HIPG will sublease the required land area within the port, for the construction and operation of the pipeline, with approval of the Sri Lanka Ports Authority. All port and terminal related facilities and services, will be provided by the port including stevedoring services for the import, export and transshipment of petroleum products and crude oil subject to feasibility studies.
“The vision of HIPG is to develop the Hambantota International Port to become an energy hub for South Asia. Whilst HIPG has put the infrastructure in place to realise that goal, we are also aware that we cannot achieve it without the participation of all the players in the equation. To this end, we recognise the importance of the Ceylon Petroleum Corporation as a vital cog in the machinery,” noted Johnson Liu, CEO of HIPG.
Tissa Wickramasinghe, COO of HIPG says the port has already launched the wholesale supply of Marine Bunker fuels. “In order to build this energy hub, we entered into a strategic partnership with Sinopec Fuel Oil Lanka Ltd (SFOL) to provide bunkering services for vessels. Sinopec with their vast resources guarantees the supply of VLSFO and MGO in Hambantota, enabling the port to service all vessels plying the principal sea routes in the Indian Ocean,” he said.