IOC draws big plans for Sri Lanka

Despite Sri Lanka announcing that it would partially take back unused World War II time strategic oil storage depot in Trincomalee from Indian Oil Corporation’s local arm, the company is set to go ahead with its expansions plans in the island nation.

“We are going ahead with our expansion plans, including the setting up of a $17-million Bitumen handling facility. We are also looking to refurbish about 30 oil tanks at Trincomalee within the next two years, which may see an investment of about $40 million,” said Subodh Dakwale, managing director, Lanka IOC, told Business Standard. He said the Sri Lankan government has not informed them about any proposal to take back the oil tanks.

Dakwale said the company was also working on a roadmap for larger investment in the coming years. IndianOil had drawn up initial plans to set up its first refinery outside India in Sri Lanka with an investment of more than Rs 20,000 crore but negotiations with the government are yet to take place. “There were plans for setting up refinery there but nothing has crystalised,” said Dakwale.

Lanka IOC bought one third share in the retail business of Lanka government way back in 2003. Currently, only 15 of the 99 tanks — each with a capacity of 12,000 kilolitres — by Ceylon Petroleum Storage Terminals Ltd are operational. “We are working on various possibilities on how to go ahead in utilizing those facilities,” Dakwale added.

The China Bay Tank farm of World War II vintage is the largest tank farm located between the Middle East and Singapore. There were clouds over the IOC investment in that country after the Sri Lanka information minister Keheliya Rambukwella said that there were provisions to re-possess tanks that were not used by Lanka IOC.

Just when the Lanka IOC was dealing with the problem of taking back of oil tanks, it had to return for the first time a consignment of contaminated diesel fuel last week. Interestingly, according to Lanka IOC, the quality of fuel which was checked prior to exporting from Singapore was higher and turned sub-standard mid sea. “We rejected the consignment and had filed a case at Colombo High Court. Once, the Singapore company assured bank guarantee, it was returned back,” Dakwale said.

According to reports, the Colombo High Court had ordered the seizure of a ship belonging to a Vietnamese company, which was bringing a stock of 4500 metric tonnes of sub-standard diesel at Trincomalee port. The consignment was valued at $ 13 million, but had changed its colour onboard with inferior quality.