Petrol issue investigation inconclusive: CPC officials, the mafia blamed | Sunday Observer

Petrol issue investigation inconclusive: CPC officials, the mafia blamed

It is a week after the petrol crisis that plagued the country into a state of temporary paralysis. In the immediate aftermath, many questions remain as to the cause of the crisis. Also, it has prompted the energy security of the country.

The petrol crisis emerged due to several reasons, including the rejection of a petrol consignment imported for Lanka IOC (LIOC), on October 17, since the consignment failed to meet the gasoline import specification of Sri Lanka; the delay of the fuel tanker Neveska Lady, carrying the scheduled petrol consignment for Ceylon Petroleum Corporation (CPC); and due to failure of the Sapugaskanda refinery. Surpassing it all was the SMS which went viral in early November, informing of a petrol shortage, which created panic buying resulting in the rapid depletion of available stocks.

This week saw several interesting developments on the crisis, from the release of the Cabinet Sub -Committee report on the petroleum crisis to the reports of an illegal racket involved in the mixing of petrol with kerosene during distribution.

Cabinet Sub- Committee report

The Cabinet Sub- Committee report on the causes that led to the petrol shortage was presented to President Maithripala Sirisena on Tuesday (14) by the Chairman of the Cabinet Sub- Committee, Special Assignments Minister Dr. Sarath Amunugama.

The report states the failure to maintain relevant stocks to match the storage capacity as the main reason for the crisis. “On October 17, the total usable capacity at the storage plants was 116,978 metric tons. This includes, 100,164 metric tons storage capacity for 92 petrol and 16,814 metric tons of storage capacity for 95 petrol. The rejected petrol consignment belonging to LIOC had 20,000 metric tons of petrol and the delayed tanker Neveska Lady carried 36,500 metric tons. Together, it adds up to 56,500 metric tons of petrol, leaving a more usable storage capacity,” the report read.

The report further added, had the stocks been adequately managed, no petrol shortage would have occurred as a consequence of the rejection of the sub-standard oil consignment, the interruptions at Sapugaskanda Refinery and delay in the arrival of Neveska Lady with the consignment for CPC.

“As per the estimates, as at October 17, there should have been petrol stocks adequate for 24 days, i.e. until November 8 or 10.

Therefore, the reason for a crisis breaking out in early November is not clear.”The report adds, failure to maintain a minimum stock of petrol, failure to inform higher authority of the impending shortage, lack of a mechanism to counter a shortage and failure to maintain buffer stocks may have been contributory. The report pronounces the higher officials of CPC as responsible for the crisis, while the weakness of the total system was contributory.

Accordingly, the Sub-Committee has recommended setting up a Board of Inquiry consisting of three technical officers to further probe the matter.

The Cabinet Sub -Committee was appointed by President Sirisena, on Tuesday (7), as per a request by Minister of Petroleum Resources Development, Arjuna Ranatunga, to probe the fuel shortage.

The Sub-Committee comprised, Minister of Megapolis and Western Development Patali Champika Ranawaka, Minister of Disaster Management Anura Priyadarshana Yapa and Special Assignments Minister Dr. Sarath Amunugama.

Petroleum Joint Union Alliance, Convener, D J Rajakaruna declares in the preparation of the report, a few vital areas have not been considered.

He pointed out, the report has not investigated into the reasons for the delay of Neveska Lady, since the report arrived before the completion of the unloading of the fuel consignment.

According to him, the operationable storage capacity is approximately 80,000 metric tons. Of this, there is a deadstock, and therefore, 40,000 metric tons of petrol is the maximum buffer stock possible. This leaves a supply adequate for only about 13 days, he said.

Measures to prevent recurrence of a crisis

The Sub- Committee report recommends the following as steps to prevent the recurrence of a petrol shortage: implement modern stock management systems; stabilize costly and flawed areas in petrol storage and distribution; enter into long term procurement contracts which involve a transparent process; enter into Government to Government agreements with nearby countries in order to purchase emergency stocks; expand storage and pumping facilities adequate to maintain stocks to match the petrol demand by 2025; expand refinery volume and storage capacity of the Sapugaskanda Refinery and come to a conclusion on the China Bay storage facility.

According to Rajakaruna, the best long term solution to the matter lies in expanding and upgrading the Sapugaskanda Refinery. “At present, the refinery generates only 30 percent of the country’s requirement,” he said.

Rajakaruna adds that the best short term solution is to expand storage and unloading harbor. “Using storage capacity at China Bay is one solution for this. This can save Rs.Two billion per year, when shipping costs and unloading speed is considered,” he said.

Speaking on the issue, Former CPC Chairman and Managing Director, T. G. Jayasinghe said, in time to come, there will be more diesel needed for generators and that there are no facilities to provide for this.

“Therefore, it is important to manage the storage issue. LIOC uses CPC storage terminals but they have not spent a single cent on upgrading and refurbishing them,” he pointed out.

Jayasinghe says that LIOC supplies the entire North and East, which in reality is more than 16 per cent of the market share they claim. “Also, they only need about 10,000 metric tons of petrol to meet the demand.

They are allowed to import 35,000 metric tons. Since CPC and LIOC use the same storage, oil is bartered between the two bodies. LIOC imports oil when prices are low and barter with CPC. However, CPC imports when prices are high and provides a stock for LIOC, which earns profits this way,” he said. Jayasinghe said that LIOC has one third share of Ceylon Petroleum Storage Terminals Limited (CPSTL), involved in storage and distribution of petrol. “Therefore, LIOC has a say in this crisis,” he says.

Cabinet Sub- Committee member, and Minister of Megapolis and Western Development, Patali Champika Ranawaka said, CPC has an adequate storage capacity and that China Bay tanks are not necessary. “China Bay storage is in a dilapidated condition and needs to be refurbished. With regard to the shortage, the main issue lay in the mismanagement of the existing storage capacities,” he said.

Minister Ranawaka further said, the CPC has no emergency procurement plan beyond 60,000 metric tons and they had not maintained the buffer stock.

“The SMS might have generated an artificial shortage, but some strange things have happened on October 30. Neveska Lady carrying the supply of petrol for CPC was delayed and LIOC informed that they cannot bring the consignment they promised in place of the rejected stock. Also, around the time, Sapugaskanda Refinery shut down. Therefore, this was the day the mafia hit the CPC,” he said.

Minister Ranawaka added that the Sub-Committee has requested President Sirisena to investigate into the matter, and the President will take relevant action depending on the findings of the investigations.

Illegal mixing of kerosene

Alongside the petrol crisis, a smaller scale petrol racket, which involved mixing petrol with kerosene, had surfaced from the Galewela area. On Monday (13), Special Task Force (STF) officers from the Dambulla camp, conducted raids in the area, acting on intelligence received, according to STF Camp Dambulla, 2IC, Inspector of Police, I. Ranathungage.

“We raided an abandoned quarry in Deva Hoowa, Makulugaswewa, Galewela area and caught two individuals in the process of transferring petrol from a bowser belonging to LIOC to a Dimo Batta.

They have tampered with the seal and broken it and were transferring petrol via a tube to barrels in the Dimo Batta,” Ranathungage said.

He said, 460 litres of petrol was transferred by the time the raids took place and they have also found 235 litres of kerosene at the scene. Also, three iron barrels were found in the Dimo Batta to store the pilfered petrol. He further said, the reduction in petrol was then filled with kerosene by these individuals, prior to re-sealing and distributing the petrol to their expected destination.

“This racket has been going on for some time, with the involvement of an individual from Galewela area and certain oil bowser drivers. We arrested the driver and the assistant at the scene, but the suspect from Galewela escaped during the raid. Currently, investigations are being carried out by the Galewela Police.”

The LIOC bowser was transporting petrol from Trincomalee to the Vivida Seva fuel station in Yatawatta, Pallepola.

The bowser belongs to M.L.M Fasliya from Kinniya. “The driver has diverted the bowser from its route, to Galewela, in order to carry out the mixing and pilfering,” said Ranathungage. He added that the bowser, Dimo Batta , the transferred petrol, tubes and kerosene stocks are now detained by the Galewela Police for further investigations.