Govt. urged to make Hambantota a common user bunker facility
Monday, 6 April 2015 00:00
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The Association of Licensed Bunker Operators of Sri Lanka (ALBOSL) has urged the Government to operate Hambantota as a common user bunker facility in the national interest as opposed to restricting it to a single player.
The call by ALBOSL is apparently over fears that certain parties are trying to make a deal on the Hambantota oil tank farms behind closed doors. Industry sources warned that unsolicited and secret deals were the norm during the ousted regime of President Mahinda Rajapaksa hence the current Government should not follow a similar pattern.
The industry has urged a more transparent process in the true spirit of Yahapalanaya promised by the Government of President Maithripala Sirisena and Premier Ranil Wickremesinghe.
Separately, the ALBOSL in a letter to Sri Lanka Ports Authority Chairman Dr. Lakdas Panagoda, copied to Minister of Ports, Shipping and Aviation Arjuna Ranatunga, has impressed upon the importance of promoting Hambantota as a common user facility whilst warning against the dangers of a single player arrangement.
“Restricting it (Hambantota) to a single player within the bunkering industry in Sri Lanka will lead to a monopoly again,” the association warned. There are 12 licensed bunker operators in Sri Lanka.
ALBOSL said it had been eagerly awaiting an opportunity to expand its operations to Hambantota. It was noted that price was the most significant factor in replenishing bunker fuel at any destination and capacity constraints at JCT Oil Bank had been a hindrance for the industry to import larger cargo parcels in to JCT tanks.
As a result, higher freight payable for importation of smaller cargo parcels has led to higher bunker prices in Sri Lanka compared to regional ports and major bunker hubs. This has adversely affected the development bunker industry in Sri Lanka and the market volumes have been stagnant around the same levels over the years.
Sri Lanka’s geographical location has given the country a great advantage to serve passing ships if competitive bunker prices could be offered at international service standards.
“Therefore operating Hambantota tanks storage as a common facility will enable ALBOSL members to utilise storage in both Colombo and Hambantota and import larger cargo parcels with better economics,” the association emphasised.
“This will lead to an overall improvement of bunker prices in Sri Lanka and facilitates capturing more bunkering businesses in and around Sri Lanka and increasing the foreign exchange income to the country,” ALBOSL added.
The higher number of ships calling for bunkering will increase income to SLPA and other ancillary service providers as well.
The association has pointed out that over the last few years bunker prices and related services in Indian ports had developed immensely and continued to do so. Bunker prices at Indian ports are much more competitive than in Sri Lanka and almost on par with Singapore and Fujairah. The Indian Government has joined hands with Mauritius and Seychelles to develop bunkering activities within the region. All these will create more competition for the Sri Lankan bunkering and maritime industry in the years to come, something the nation should be prepared for.
ALBOSL said that single player bunkering will lead to a monopoly being created and even though such a player will be able to import bigger cargo parcels at lesser freight and have a competitive edge price-wise over all other players in the market, such a scenario would be unequal and unhealthy forcing others to make losses and quit.
“Most importantly the closure of bunkering businesses of other players operating in Colombo will lead to the loss of employment for hundreds of people. The monopoly will further lead to uncompetitive bunker prices and definitely hinder the growth of the bunkering and maritime industries in Sri Lanka as a whole,” the association pointed out. “We believe such a situation will be contrary to the Government’s vision of developing the maritime industry and creating more employment opportunities.”
The ALBOSL has urged the SLPA to consider the factors emphasised by the industry and arrive at a favourable decision.
“We strongly believe that all our efforts should be aimed at developing as an industry and as a nation but not as individuals and we, as ALBOSL members, are committed to extending our fullest cooperation in this collective effort,” the association stated.
