Lanka IOC says diesel not substandard but off-spec only

•  Temporarily suspends buying from Singapore unit of Glencore

COLOMBO (Reuters): The Sri Lankan unit of Indian Oil Corporation on Tuesday said it has suspended buying oil products from Glencore Singapore subsidiary Glencore International PLC temporarily after it found an off specific diesel.

Lanka IOC PLC MD Subodh Dakwale – Pic by Daminda Harsha Perera

Sri Lanka’s only private sector fuel retailer, Lanka IOC PLC returned 7,562 tons of diesel to Glencore Singapore Pte Ltd.

“Till we get a solution for this, we will not get anything from them,” Subodh Dakwale, managing director of the Lanka IOC told reporters.

 “The diesel is not sub standard, but it is off spec only with respect to appearance and colour as per to the discharge port laboratory test.” Glencore was not available for immediate comment. Sub-standard fuels have damaged thousands of Sri Lankan vehicles in the past two years.

Dakwale, however, said the company will not take any legal action against Glencore Singapore Pte Ltd, but awaited official response from the company. Lanka IOC, however, accepted the 28,000 tons of gasoline which came in the same ship had met specifications, Dakwale said.

In August, thousands of vehicle engines were damaged due to 20,000 tons sub-standard diesel, which the state-owned Ceylon Petroleum Corporation (Ceypetco) blamed the world’s largest oil trading firm Vitol for supplying it. Vitol, which rejected the allegation, was later taken off Cepetco’s supplier list.

In July 2011, Sri Lanka withheld payment for a 20,000 tons consignment of gasoline supplied by Dubai-based Emirates National Oil Company (ENOC) after motorists claimed petrol supplied by the firm was damaging their vehicles.