Minister of Petroleum Resources Development, Chandima Weerakkody spoke to the Nation regarding allegations levelled against the government in relation to the farm complex containing oil storage tanks in China Bay, Trincomalee, the recent strike by affiliated trade unions at the Petroleum Corporation, the need to balance the geopolitical interests of China and India with the national interests of Sri Lanka, the holy grail of the pricing formula, oil refinery activities in the country and the proposed governmental solutions for consumer related complaints regarding services at filling stations.
Q: What is the background to the issue of the Trinco oil tanks storage complex from the government’s standpoint?
A lot of people don’t know this about the oil tank farm in Trincomalee but although we gained so called independence in 1948, former Prime Minister S.W.R.D. Bandaranaike acquired the farm only in 1958 by paying pound sterling 250,000 to the British government. The land on which the tanks was acquired after it was purchased by the government by making a payment. It is used by the Ceylon Petroleum Corporation (CPC). Only a few tanks are being made use of. The distribution in that region is about seven per cent. For this, the required number of tanks is available.
In 2003, when the government was under then Prime Minister Ranil Wickremesinghe, the entire farm (102 tanks, three were destroyed, so the number of tanks was 99) was given to India on a 35 years lease. The annual rent Sri Lanka received for this was USD 100,000. Subsequent governments including the ones under former Presidents Chandrika Bandaranaike Kumaratunga and Mahinda Rajapaksa and the current one annually collected the rental from the Indian government. Back then, there was no talk of acquiring it totally or developing it jointly. According to former Minister of Petroleum Industries (presently the Minister of Disaster Management), Anura Priyadharshana Yapa, during Rajapaksa’s time, there had been discussions with regard to developing it jointly, the documents pertaining to which are in the possession of the Ministry of Finance and yet nothing was initiated.
When I took over, I visited the place and found it to be of national importance. I got engineers to inspect it. I then submitted a Cabinet paper with regard to acquiring 15 tanks to and for the CPC as 15 are with the Indian Oil Corporation (IOC) through its subsidiary, the Lanka IOC Public Limited Company (PLC), for the balance to be developed through a joint venture between the IOC and CPC on an equal sharing basis. Wickremesinghe then submitted a paper which rescinded mine.
Subsequently, following the energy crisis, a sub-committee co-chaired by myself and Minister of Power and Renewable Energy, Ranjith Siyambalapitiya was formed and we presented the case to experts who were of the view that the country should have a buffer stock. Every time there is a drought and water related issue in the country, there are blackouts. This is not because the Ceylon Electricity Board cannot generate electricity even with parts of the oil-fired Kerawalapitiya power station and the coal-fired Norochcholai power plant being dysfunctional, but because the CPC couldn’t continuously supply fuel oil and diesel. In order to have a buffer stock, we have to at least acquire some of the tanks in Trincomalee.
I did a study and organized a Cabinet paper in which it was proposed that by distribution from facilities in Hambantota, Trincomalee and Kankesanthurai, we could save money (by my calculation Rs 400 million), resolve environmental issues and provide a solution to traffic. A Cabinet paper was then jointly put. It has been approved and not rescinded.
When Wickremesinghe submitted the memorandum of understanding (MoU) with India in Parliament, there were heated arguments between the two countries. I discussed it with Indian Foreign Secretary, Subrahmanyam Jaishankar. President Maithripala Sirisena too told the Indian participants the same.
At least 10 tanks are needed for the CPC. The IOC presently uses 14 which are situated in the lower tank farm. The balance 74 will be in a joint venture. This has been agreed on. Ten tanks are more than enough for the operation. This joint venture is what is being referred to as a public-private partnership between the CPC and the Sri Lanka owned Ceylon Petroleum Storage Terminals Limited of which the IOC is a shareholder.
Q: Is there going to be a sale to India?
When the aforementioned discussions were ongoing, news of an alleged attempt to sell the farm began to spread. I must say in no uncertain terms that there is no such sale. I will vehemently resist and oppose any such sale. There will be no sale under these circumstances. The terms and provisions of the agreement that the parties will enter into in the future will be done upon discussions with the trade unions and other stakeholders. This was decided at a meeting held between the trade unions, Wickremesinghe and me. President Sirisena too categorically informed the Cabinet that the MoU that Prime Minister Wickremesinghe will be entering into in India should comply with the understanding given in writing to the trade unions.
The story of the sale is a deliberate fabrication. Many political parties have been in the government, during the tenure of the said agreement. Previous governments under Prime Minister Wickremesinghe and the United People’s Freedom Alliance Government with the Sri Lanka Freedom Party, the Janatha Vimukthi Peramuna (JVP) and also the then breakaway from the JVP, Wimal Weerawansa, Rajapaksa, Sirisena and Kumaratunga have been in these governments. All political parties have been in them.
I am making some effort to take back at least half of the tanks. People should support this. Instead uncertainty is being created in diplomatic relations between Sri Lanka and India with whom we are working. This is an effort to ruin the country.
Sri Lanka and India have historically been great friends as is the case with relations with China, the United States, Europe and other countries. Diplomatically, we have to survive internationally.
Therefore, all have to behave responsibly. This is not a drama. This is very serious. Any intelligent individual can read and know what is to be done. There is enough freedom now. People can protest and argue without being kidnapped. Instead, people are making use of freedom in a manner detrimental to the country. Some have called on us to teach a lesson to these people. If the government does it, then all will lose freedom. Freedom is very valuable. Freedom must be preserved and protected for future generations and if it is used irresponsibly future generations will lose the luxury of freedom. Some call for a dictatorship as opposed to a democracy. Sri Lankan people tend to forget that they lived under a dictatorship and are now living in a democracy. My appeal to the public is to be intelligent and patriotic and think openly instead of being narrow-minded and stooges of an individual or a few.
I am open to discuss this with anyone. Tell me if I am wrong.
Q: How will you balance the geopolitical interests of China in this instance?
There already are leases with China. There is the Chinese Port City, harbours, airports and roads that are being constructed with Chinese funding. Indian investments must come through too. However, for any investment to come through, we must not give into anything that is unwanted.
Q: What is the government doing with regard to introducing a pricing formula?
I have submitted a proposal regarding the pricing formula. The Minister of Finance has to decide. The ball is in the court of the Ministry of Finance.
Q: Is there a fuel shortage?
There is absolutely no shortage. Everything has come back to normalcy. There is frequent delivery. Everyone is working very hard.
Q: What is happening to oil refinery services within the country?
About refurbishing the existing oil refinery at Sapugaskanda and expanding it to refine 100,000 barrels, an expert committee that was appointed unanimously approved the proposal and another committee appointed to cross-check the work of the previous committee too approved it.
Q: Consumers complain of low quality fuel and being cheated at filling stations. What is being done in this regard?
There is no issue of quality. Quality is guaranteed and since I took over not a drop of low quality crude oil or refined fuel has come into the country.
There is however an issue with some of the pumps. They are very old. We have floated a tender in this regard.
We have also decided on automating the system. If there is any cheating of consumers taking place at filling stations, people can ascertain it. Filling station owners can manage without effort. Technology will handle aspects previously handled with manual labour. It will be a foolproof system. In introducing this, the government will take the proposal to the economic affairs committee for approval.