Sri Lanka’s state-run Ceylon Petroleum Corporation has inked a deal to import fuel through the China-backed Hambantota International Port Group and store it at a nearby location.
HIPG said will sublease the required land area within the port, for the construction and operation of the pipeline, with approval of the Sri Lanka Ports Authority.
“The vision of HIPG is to develop the Hambantota International Port to become an energy hub for South Asia,” Johnson Liu, CEO of HIPG said.
“Whilst HIPG has put the infrastructure in place to realize that goal, we are also aware that we cannot achieve it without the participation of all the players in the equation.
“To this end, we recognize the importance of Ceylon Petroleum Corporation as a vital cog in the machinery.”
CPC will take the fuel to a facility to be built 15 kilometres away in a 15 acre land now belonging to the Mahaweli Authority.
The new facility will expand storage and bulk distribution facilities of CPC to about three months of supply from the current one month supply in Colombo.
“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 andit will drive CPC to minimize and save additional foreign currency outflows,” Sumith Wijesinghe, Chairman of CPC said in the statement.
“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.”
Due to money printing with a soft-pegged exchange rate regime, most of Sri Lanka’s economic policies are directed towards ‘saving foreign exchange’.
HIPG said it had already started bulk supply of marine bunker fuels.
“In order to build this energy hub, we entered into a strategic partnership with Sinopec Fuel Oil Lanka Limited (SFOL) to provide bunkering services for vessels,” Tissa Wickramasinghe, chief operating officer of HIPG said.
“Sinopec with their vast resources guarantees the supply of VLSFO and MGO in Hambantota, enabling the port to service all vessels plying the principal sea routes in the Indian Ocean.”
An LPG transshipment terminal is also at the port. HIPG had also partnered with Intertek Lanka (Pvt) Ltd to set up a petroleum testing laboratory.