I regret the inconvenience caused to the public
Minister of Petroleum and Petroleum Resources Arjuna Ranatunga says only 90,000 metric tons of fuel can be stored at Kolonnawa and Muthurajawela storages. “It is sufficient for 25 days only. Once in two weeks, one of us (CPC or IOC) has to bring in a fuel tanker”.
You rejected the request made by the Indian Oil Company (IOC) during the first week of October to increase the price of fuel. The fuel crisis that arose which lasted for about six days subsequent to an SMS that was being circulated among the people on 3 November virtually brought to a standstill activities of routine. All Ministers who came before you were able to control a petroleum crisis. However, you did not succeed. Why is that?
A. It was the culmination of several issues that brought this about. The fuel ship which the IOC brought on 17 October was rejected since it was of low quality. They did not bring the replacement cargo they promised instead, on 30-31 October. At the same time, the fuel tanker ordered by the Ceylon Petroleum Corporation (CPC) for 1-2 November was delayed until the 8th. The main issue here is the anonymous SMS that the CPC is preparing for a strike which created panic among the people who began storing fuel. Therefore, the average daily petrol demand doubled. At the same moment, the DC Yard of the Sapugaskanda Oil Refinery broke down for the first time in history. Finally, the SAP computer system of the CPC became inactive for a few hours. When all of this occurred virtually at the same time it was difficult to gain any control. Therefore, I regret the inconvenience caused to the public.
Couldn‘t these be isolated incidents?
A. I do not think so. What authority does, the IOC have to let the rejected fuel tanker remain in the outer harbour of Trincomalee? Fuel tankers getting delayed by a day or two is a common occurrence but for the first time one of our ships was delayed for 7 days. It took three days to re-activate the broken DC Yard of the Sapugaskanda Oil Refinery. The computer system which manages our fuel distribution was provided to us by the IOC. When it was not working, that work had to be done manually.
As a result of people panicking due to the SMS, the demand for fuel increased. I am not trying to give excuses. But how could all of these incidents take place simultaneously? I am suspicious. An investigation should be held.
Hasn‘t a Cabinet sub-committee been appointed to investigate this?
A. The Cabinet Sub-Committee will discover information to a certain extent. However, that is not how I wanted it. Therefore, I told the President, I wanted an in depth investigation and to find out the bottom line. I cannot do that. I can only inform the relevant authorities. If they need to, the Criminal Investigation Department (CID) can find out from where this SMS originated. Why did the Oil Refinery break down? Why did the Computer system come to a standstill? Why did IOC cancel the replacement cargo? Why is that tanker still at the Trincomalee harbour? Why did our ship get delayed for seven days, for the first time in history? When such incidents take place in this country in the manner it did, these are definitely not isolated incidents.
Does that mean that the CPC and the Ministry is out of your control?
A. All I am saying is that these are suspicious circumstances. An investigation should be carried out immediately. Not only I, but every former Minister has faced the Petroleum Mafia in the country. Therefore, it has to be inquired into whether these incidents are connected to the fuel mafia.
Do you think that this was sabotage?
A. On one hand I do think so. I am not pointing fingers at IOC. However, I do not like the manner in which these incidents occurred. Even while so many things have happened how is the IOC detaining this ship still? I am curious. On the other hand, we had a lot of shortcomings in our system. We were chastised and taught a good lesson so that nothing like this would happen again in the future.
Can‘t you think that part of the government acted in a conspiratorial manner at this moment to privatize the fuel market?
A. Yes, I can believe it, because many are waiting to privatize the fuel market in the country. Even when I was at the Port, I was not in favour of doing certain things. Even though I liked the fact that investors would come, I was not ready to give into all their demands. Only we and IOC are in the fuel market. However, other factions are waiting to creep into this. If they do so, we will be deprived of many things that we possess as the CPC. I do not agree with that. It is possible that they too were involved in this chain of events.
Last week Prime Minister Ranil Wickremesinghe said in parliament that IOC should not be held responsible for the crisis. Do you see a connection between the previous question I asked and the statement of the Prime Minister?
A. I won’t speak against the PM’s statement. However, I have informed the President and the Prime Minister about the real situation. I will show the country next week, how things happened. Then the public will decide who is right and who is wrong.
Just because IOC which has a market share of 16% could not bring in one ship of fuel, why was the CPC with an 84% market share unable to control the situation?
A. This is not a question about the market share. Only 90,000 metric tons of petrol can be stored at Kolonnawa and Muthurajawela storages. It is sufficient for 25 days only. Once in two weeks, one of us has to bring in a fuel tanker. When a fuel tanker fails the testing for quality, there is a commitment to provide a replacement ship. They did not do that. From the day the fuel tanker was rejected on 17 October till 8 November, a period of 22 days no fuel tanker came to the country. Even then we had fuel to be distributed until the 9 morning. If the public had not panicked due to that mischievous SMS and the average daily demand for fuel of 2,500-2,600 mt did not increase to 4,500 MT in an unusual manner, there would not have been such a problem. We would not have run out of fuel or even experienced a shortage. If this sudden artificial demand had not been created, we could have stretched that petrol in stock for a few more days.
Trade Unions accuse that if the CPC had adequate storage capacity, such a situation would not have arisen?
A. That is true. We have storage capacity for 25 days only. A long time ago a Cabinet Paper to construct new tanks was approved but they were not built. CPC and IOC do not have separate fuel tanks. We are sharing these tanks. I would personally prefer if we are given separate tanks at the Trincomalee China Bay Oil Tank Farm. However, we have to carry out the quality check. Now we have put in motion a tender process to construct six tanks.
If the China Bay Oil Tank Farm had been in the possession of the CPC this type of a problem would not have occurred, would it?
A. Yes. According to an agreement signed between Sri Lanka and India 15 years earlier, China Bay is in the possession of IOC. Personally I am not in favour of that. Subsequently in 2005 the then Chairman of the Sri Lanka Freedom Party (SLFP) and former President Mahinda Rajapaksa who made such strong decisions had the possibility to shout out and say that we will not give them away and we will retain all 99 tanks and annul the agreement. However, even he was unable to do so.
Now, Maithripala Sirisena is also the Chairman of the SLFP and the President of the country. Can‘t he do this?
A. The Government has not made such a decision. Once an agreement is signed if it is not beneficial to the country, the Government must intervene and finish it off. Now legal action has been taken. We talked this over with the Trade Unions and reached a decision that nothing will be done until the verdict is issued. However, that is not a decision I can make.
The opportunity to construct the largest oil refinery to be built in this country, at the Hambantota Port has been provided by the Government to a Chinese Company. They have made a request to allow them to issue 40% of the fuel from that to the local market?
A. No such request has been made from me as yet.
Even though the government rejected that request, discussions are still ongoing?
A. Not with me.
If the Sapugaskanda Oil Refinery is modernized, the foreign exchange spent on refined oil would remain in the country? Why is the government hesitating so much to modernize Sapugaskanda?
A. We definitely have to modernize the Sapugaskanda Oil Refinery. The Energy Security in the country is established through that. Even if it becomes possible to bring a fuel tanker and unload it to Muthurajawela very quickly, it will take a few days to unload it to Kolonnawa. Then demurrage has to be paid for the ships. The buoy at Kolonnawa broke down even previously. It is very old. Those have to be constructed. Now, we can refine only one third of the daily requirement of fuel. The balance two thirds we import as refined fuel. If Sapugaskanda is modernized, all of this money will be saved. If that is done, we need not bow down or stretch out our hands. At the same time I can set up for the country, a system where neither Ministers nor Chairmen can obtain commissions. Investing in these is far more important than some of the investments being carried out now. A large sum of US Dollars 2.5 billion will have to be spent on this. The Treasury is not providing money. However, we will be able to recover this money within 5-6 years. This is something that is essential for the country. But I am not sure whether the government will allow me to do that.
Why do you say that?
A. What I do is, good for the country. I do not know whether it is good for the government or not. This is my view but not the government’s. We are now talking continuously about LNG. I told the Prime Minister last week at the Cabinet Committee on Economic Management, to prepare a national policy on LNG. You cannot make decisions and then later prepare a national policy. It has to be done before making decisions.
However, we do not have any national policy regarding energy or any other subject. In that way, as a country we are very weak. When a new Minister comes whatever exists is changed. When another person comes they change the previous things. In other countries national policies are prepared and only minor facts are changed. But here these are turned upside down from time to time. That is why we are unable to move a long distance. However as long as I am here, I will not allow anyone to commit wrong doings and do things as the fuel mafia desires. Therefore, it is possible that I will not be permitted to remain here for long.
An Iranian Company brought a proposal to modernize the Sapugaskanda Oil Refinery at zero interest with a repayment period of 20 years. They also expressed their willingness to set up a rupee company in Sri Lanka so as to enable the repayment of the debt in rupees. Even though the Prime Minister said last week that it could not be done due to the American Economic sanctions now they have been removed. Why do you not use that opportunity?
A. Not only that. Another four investors have provided expressions of interest. I have given them time until 31 December to send in their proposals. If that happens, I will select the best and present it to the Cabinet during the first week of January. However I am not ready to allow room for unsolicited proposals.
If any culprits are found who are guilty of complicity in the petrol crisis, will the government take steps against them?
A. I do not know. Those who were against the government have now come in and are turning somersaults! I am also disgusted about some of the things that are happening. It is only Rajitha, Champika, Fonseka and I who criticize the government while being within. However, we are fed up now.