Hambantota International Port Group (HIPG) and the Ceylon Petroleum Corporation (CPC) signed a Memorandum of Understanding (MoU) to develop Hambantota Port as a strategic energy centre in Sri Lanka.
As part of the agreement, CPC will establish a separate storage terminal 15 km from the port with associated facilities for both domestic and export purposes connected to the port via a pipeline.
State-entity CPC, which provides the majority of petroleum products to local consumers, has identified a land area of approximately 50 acres owned by Sri Lanka Mahaweli Authority for the project.
Sumith Wijesinghe, chairman of the CPC, said: “The growing demand for fuel in the past, combined with the country’s anticipated development in every aspect, has resulted in the opening up of opportunities for investors to establish ventures in Sri Lanka.
“In this context, CPC’s product portfolio has to be managed to suit the energy mix of the country if we are to be competitive, especially in comparison with other energy sources.”
The existing storage facility of CPC/CPSTL is sufficient to store refined petroleum product requirements of the entire country for a period of only one month, a capacity below the requirements of ensuring the energy security of the country.
CPC currently imports refined petroleum products to cater to approximately 70% of the country’s demand via the Colombo port and suburbs.
Wijesinghe added: “The partnership with HIPG will increase the storage facility of CPC to the expend capacity; thereby the impact of global fuel price fluctuations can be mitigated, and it will drive CPC to minimise and save additional foreign currency outflows.
“Apart from that, setting up in the Hambantota Industrial Zone, away from the traffic congestion of the country’s most residential cities, will make it an environmentally-friendly terminal.”
HIPG will sublease the required land area within the port for the construction and operation of the pipeline with the approval of the Sri Lanka Ports Authority.
All port and terminal related facilities and services will be provided by the port including stevedoring services for the import, export and transhipment of petroleum products and crude oil subject to feasibility studies.
Johnson Liu, CEO of HIPG, said: “The vision of HIPG is to develop the Hambantota International Port to become an energy hub for South Asia.”
“Whilst HIPG has put the infrastructure in place to realise that goal, we are also aware that we cannot achieve it without the participation of all the players in the equation.”
The port has already launched the wholesale supply of marine bunker fuels according to COO of HIPG Tissa Wickramasinghe.
The port entered a strategic partnership with Sinopec Fuel Oil Lanka Limited (SFOL) to provide bunkering for vessels in order to build its aspired energy hub.
Using its vast resources, Sinopec can guarantee the supply of VLSFO and MGO in Hambantota, enabling the port to service all vessels plying the principal sea routes in the Indian Ocean.
Additionally, transhipment of LPG and delivery for local consumption is important to the port and it has two main players operating supply facilities within the port.
HIPG also partnered with Intertek Lanka (Pvt) Ltd to establish a state-of-the-art petroleum testing laboratory within the port to provide services to the energy hub, further strengthening the port’s capacity.
Wickramasinghe said: “Our goal is to ensure that all our stakeholders take maximum advantage of the port’s unique location.
“Hambantota International Port has been operational throughout the pandemic and has followed all the necessary protocol under guidelines set by CMPort to ensure the health and safety of all involved.”