Ceylon Petroleum Corporation (CPC) has signed a memorandum of understanding (MoU) with Hambantota International Port Group (HIPG) to develop a strategic energy centre, including a petroleum products terminal, for Sri Lanka.
CPC’s existing storage facility in Sri Lanka can only store enough refined petroleum products to supply the country for one month, which does not meet the energy security requirements of the country. CPC wants to build enough storage to supply Sri Lanka for three months. It has identified a 50 acre site around 15 km from the port, owned by Sri Lanka Mahaweli Authority, for the storage terminal, which will be used for domestic and export purposes. It will be connected to Hambantota Port via a pipeline.
HIPG will sublease land in the port area for the construction and operation of the pipeline, with approval from the Sri Lanka Ports Authority. The port will provide port and terminal related facilities and services, including stevedoring services for the import, export and transshipment of petroleum products and crude oil.
Johnson Liu, CEO of HIPG, says that the company’s vision is to turn the port into an energy hub for South Asia. CPC will be ‘a vital cog’ in its plans, and that the deal with the company will help to strengthen the port’s position ‘on the global maritime map.’ The port already provides some bunkering services with Sinopec Fuel Oil Lanka Limited (SFOL) and has established a state-of-the-art petroleum testing laboratory with Intertek Lanka.
Sumith Wijesinghe, chairman of CPC, says that with new investment and development in Sri Lanka, CPC’s product portfolio needs to be managed to suit the energy mix of the country if the company is to remain competitive.
‘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. Taking all these factors into account, I believe this partnership will put an end to the negative external factors of the country’s fuel market,’ he adds.