Govt. to liberalize bunkering industry
Petroleum Resources Development Minister Chandima Weerakkody said the country’s bunkering industry will be liberalized and developed in order to take advantage of the lack of a bunkering hub in South Asia.
“We have to liberalize our stringent laws in order to allow our bunkering licence holders to get into competition with various other players,” he told a maritime conference in Colombo, yesterday.
He noted that the government will expand the market, so that the companies do not have to vie for profit in a restricted marketplace.
“Each player has to order only smaller quantities so invariably the prices go up, so we are planning to order in bulk and provide bigger tank facilities—a tank farm to accommodate larger storage — so that the licence holders will be able to sell at a competitive price,” Weerakkody said.
John Keells Holdings PLC Transportation President Romesh David noted that high price and lack of capacity are the main drawbacks Sri Lanka has compared to Singapore and that implementation of infrastructure such as mass flow meters, better tanks, etc., would allow Sri Lanka to become competitive.
Hayley’s Advantis had this month called on Finance Minister Ravi Karunanayake requesting tax concessions for bunkering due to low margins, a request which Karunanayake, who also has interests in the logistics industry, refused to provide.
Meanwhile, Weerakkody noted that despite opinions that bunkering licences should be restricted, the ministry will open up the licensing process, since the existing players, including the state monopoly until 2008, had not even taken the full advantage of the restricted potential for the past four decades.
“So it (bunkering licence) is open to anyone who has the capacity, competency and confidence to get involved in this business. Increase in competition is for the betterment of the industry,” he said.
However, he noted that the players will be well regulated, since over a dozen current licence holders have many shortcomings.
“Only parties that can supply, taking into consideration environmental concerns and can continuously supply quality products, will be given a licence and that also for a period of one year and only upon satisfaction of that performance the licence is extended,” he said.
Weerakkody said that bunkering could play an even bigger role than other marine services in creating a maritime hub in Sri Lanka, which is located just off one of the world’s busiest shipping lanes and could help the government reduce the budget deficit considerably.
David noted that Sri Lanka sold just 1.9 million metric tonnes of bunkering fuel in 2015, which is just 2.7 percent of the business of Singapore and Fujairaj in Dubai combined, in between which there is no option for ships to bunker, presenting Sri Lanka with an immediate opportunity.
He added that the Hambantota bunkering tank, built at a cost of US $ 100 million, is currently idling. Lanka IOC PLC, the country’s second largest seller of bunkering fuel, is currently developing and renovating the Trincomalee oil tank farm.