Sri Lanka’s Oil Tank Farm in Trincomalee open for investments
The Morning: The Ministry of Power and Energy will call for Expressions of Interest (EOIs) internationally from interested strategic investors for the joint development of the Trincomalee Oil Tank Farm in partnership with the Trinco Petroleum Terminal Ltd. (TPTL).
Speaking to The Sunday Morning Business, Ceylon Petroleum Corporation (CPC) and Ceylon Petroleum Storage Terminals Ltd. (CPSTL) Chairman Saliya Wickramasuriya revealed that within the next few weeks, the Ministry of Power and Energy would call for EOIs internationally for the development of the 61 oil tanks of the Trincomalee Oil Tank Farm held by TPTL.
The TPTL is a joint venture between the Lanka Indian Oil Company (LIOC) and the CPC.
“The TPTL will be the lead partner because it owns the oil tanks, but the investment required to develop the oil tank farm may come from a third-party strategic partner, depending on the modalities of the agreement. We are testing the market to test what kind of interest there is. Since there are 61 tanks, it’s a large investment project,” he said.
Commenting on the possible commercial applications for the oil tank farm, he stated that it could be used for commercial storage, where it could be rented out while a part could be used as a strategic reserve to store cargo.
Addressing the current status of the TPTL, he said: “The company has been incorporated; we have completed the Articles of Association and we are in the process of obtaining approval from the Board of Investment (BOI). While both parties contributed an initial investment to cover the incorporation costs and the initial site survey, no further investment has been carried out so far.”
The Trincomalee Oil Tank Complex Development Project was approved by the Cabinet of Ministers on 4 January 2022. Accordingly, it was decided that 24 of the 99 tanks would be given to the CPC, 14 tanks to the LIOC, and 61 tanks to the TPTL – the latter on a 50-year lease, with CPC having the majority stake in the subsidiary.
Consequently, LIOC and CPC entered into an agreement on 6 January 2022 for the joint development of the 61 tanks held by Trinco Petroleum Terminal as a Joint Venture (JV). CPC holds a 51% stake in the company while LIOC holds a 99% stake.
The Trincomalee Oil Tank Farm, built by the British as a refuelling station during World War II, is located on 850 acres of land and originally contained 101 tanks, each with the capacity to hold 12,100 MT of oil.
Out of the original 101 tanks, two were destroyed in a kamikaze attack during a Japanese air raid on Trincomalee on 9 April 1942 and when a Royal Ceylon Air Force plane crashed in the early 1960s.
OSL take:
Sri Lanka’s energy industry is a fast expanding sector given the country’s overall economic activities and the target of becoming an emerging business destination in the South Asian region. The country’s geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed with other countries have also helped boost Sri Lanka’s economic progress. It is in such a backdrop that the government of Sri Lanka had last year opened the country’s retail fuel market enabling foreign players to also enter Sri Lanka. With the expansion in the local fuel market, there’s also a need to expand the country’s fuel storage capacities. In order to address this need, the government of Sri Lanka has presented a new investment opportunities for foreign businesses/investors through the development of the oil tank farm in Trincomalee. Given the growth and business potential in Sri Lanka’s energy industry, foreign businesses/investors could confidently explore the expanding opportunities in the country’s energy industry, especially in the development of the oil tanks in Trincomalee.
| Article Code : | VBS/AT/20240215/Z_4 |