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Thursday, 2 March 2017 01:29 - - {{hitsCtrl.values.hits}}
The Government this week decided to construct a dedicated Jet A-1 fuel pipeline and tank farm to supply aviation fuel to international and domestic aircraft at the Bandaranaike International Airport (BIA).
The project, which is estimated to cost $ 46 million (Rs. 6.9 billion), is to run parallel with Phase II Stage II of the BIA development project, which was approved by Cabinet a few weeks ago.
Petroleum Resources Development Minister Chandima Weerakkody announced plans to increase jet fuel production with growing demand alongside a reduction in kerosene production by the Ceylon Petroleum Cooperation (CPC) and an upgrade in refinery capacity at an estimated total cost of $ 2 billion.
However, plans to upgrade the existing refinery to increase output from 50,000 barrels per day to 100,000 barrels through the hydrocracker process has been in the pipeline for over a year despite Weerakkody’s insistence on the move.
“Even if we go for a commercial loan to finance the upgrade it would still be profitable,” he said, falling short of explaining how the proposed upgrade was to be financed.
Saying that the CPC had made close to Rs. 8 billion in profit in 2016, Weerakkody insisted that with an expected turnover of Rs. 400 million per month after the project’s completion, funding was not an issue.
The proposed pipeline is aimed at fulfilling growing aviation fuel demand at BIA. The Minister obtained approval for the new pipeline project as the current fuel supply, transported through railway tank wagons and road bridges, was insufficient to meet demand beyond 2018. CPC, the main agency responsible for the uninterrupted supply of aviation fuel for airlines at BIA, is to implement the project on a priority basis.
Accordingly, Cabinet this week gave the green light to call for bids under the ‘Two Envelope System’ through international open competitive bidding as an EPC turnkey project, while approving the proposal for a Cabinet-Appointed Procurement Committee (CAPC) and a Technical Evaluation Committee (TEC).
A feasibility study conducted through a joint venture between Asprofos Engineering S.A. of Greece and local partner Recourses Development Consultant commissioned in July 2014 proposed the development of a dedicated tank farm in Muthurajawela, a 23-kilometre-long dedicated Jet A-1 interconnecting pipeline and associated developments described in the Cabinet paper to include a pump station with two pumps, one Jet A-1 micro filter, two filter water separators and one custody transfer meter to transfer Jet A-1 from the tank farm at Muthurajawela to the BIA terminal in Katunayake.
The project will construct four Jet A-1 dedicated steel tanks in Muthurajawela with a total operating capacity of 75,000 m3.
The Cabinet paper also notes the requirement to either link Kolonnawa Terminal to Muthurajawela Terminal or the construction of a separate pipeline directly from the refinery to Muthurajawela Terminal to receive refinery production of jet fuel by Muthurajawela Terminal.
The project has already been cleared by the Central Environment Authority, the Minister stated in the note presented to Cabinet, adding that the Department of National Planning had also given its approval. According to Weerakkody, the CPC has already allocated $ 50 million for this project for the year. (CD)
