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Oil farm project on greasy pole
By Mahangu Weerasinghe
Construction of a massive oil tank farm at the Hambantota Port is going on despite allegations that the project reeks of irregularities. Among allegations are that the Ceylon Petroleum Corporation has not been consulted on the 10-billion-rupee (US$ 100 milllion) project and proper tender procedures were not followed.

The Hambantota Port Tank Farm Bunkering Project proposed by the Sri Lanka Ports Authority is aimed at fast tracking the first phase of the Hambantota Port Development Project. The project will revolve around the construction of a Single Point Buoy Mooring (SPBM) that will serve as a storehouse for marine fuel. Inconsistencies also appear in the funding outlines for the project, with different estimates appearing in the interim report and the cabinet paper, The Sunday Times learns.

The interim report, which was done by the Danish consulting agency, Ramboll, estimates the cost of the project to be around US$ 33 million. However, the Ports Ministry Cabinet Paper, despite referring to the interim report, puts the estimate at 100 million US dollars. The Sunday Times learns the contract had been given to China Huan Qiu Contracting and Engineering Corporation without calling for open bidding. The cabinet paper states that the "HQCEC is owned by the Government of People's Republic of China and is engaged in not only Engineering & Contracting Business of large-scale plants in Oil, Gas, Petrochemical including Urea and Phosphate plants, but also with high reputation in international contracted projects."

However, experts say this was no justification for bypassing the tender procedure. The cabinet paper also states that HQCEC has undertaken several big projects in Sri Lanka, including the Emergency Rehabilitation of Petroleum Facilities and Muthurajawela Tank Farm Project. The Cabinet proposal outlines the SPBM as "an urgent project" and says that it must precede the construction of harbour facilities in Hambantota. The Sunday Times learns that funds for the project will not come from the Chinese Government as earlier stated but as a commercial loan from the Chinese Exim Bank.

It is also alleged that the project proposal was also not referred to the National Policy Department, as is the customary practice before submitting a proposal to Cabinet. The Cabinet Appointed Negotiating Committee (CANC), which has been appointed for the particular project consists of Ports Ministry secretary, Deputy Treasury Secretary and the SLPA Chairman. SLPA chairman Deleepa Wijesundara was not available for comment.

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