Connect with us

News

Moves to kick-start Rs.15bn mega pipeline project comes under fire

Published

on

Despite anticipated drop in fuel consumption for thermal energy

bY SURESH PERERA

With three major Liquefied Natural Gas (LNG) projects now on the cards coupled with the commissioning of the Mannar wind power plant, questions are being raised over ongoing moves to forge ahead with plans to build a mega Rs.15 billion cross-country oil pipeline when the long-term demand for thermal power is expected to drop drastically.

The renewed interest within some quarters with political blessings to implement the proposed pipeline project at such stupendous cost has raised eyebrows as the monthly consumption of 45,000 metric tons of fuel to generate costly thermal energy will no longer be necessary with LNG and wind power supplementing the country’s demand for power, industry officials said.

At a time Sri Lanka is facing a grave economic crisis due to the Covid-19 pandemic, what is the urgent need for a cross-country pipeline when there will be far less fuel imports in the long term?, they asked.

With a proposed solar power project at Siyabalanduwa also in blueprint stage, constructing a high cost pipeline at this juncture is as insensible as “watering outdoor plants when it’s raining”, and ultimately result in the project being rendered redundant with billions of rupees going down the drain, they opined.

In addition, bids have already been called to build a new pipeline to facilitate the transfer of jet fuel from the Muthurajawala tank farm to Katunayake at substantial cost. Under the circumstances, what’s the viability of investing on another project when alternate energy sources will make thermal power generation irrelevant in the long run, industry players further queried.

Even if the cross-country pipeline project begins tomorrow, it will take another four years for its completion, whereas the LNG plants will be operational within three years. With a lifespan of 25 years on the pipeline, the country will not be able to recover even the cost of the multi-billion rupee project, they asserted.

Sri Lanka has already signed three major LNG deals with the governments of China, India and Japan. While the proposed combined plants are expected to add 1,400MW to installed capacity, the transnational agreements will play a key role in mitigating unreliability in hydro power supply while bolstering foreign capital inflows.

Sri Lanka’s fuel consumption per day is 5,000 metric tons, of which 1,500 metric tons are channeled to generate thermal power. While the Sapugaskanda facility has the capacity to refine 2,000 metric tons of crude oil per day, the balance 1,500 metric tons are imported as refined oil.

Lanka IOC directly imports refined oil, which is stored and distributed by Ceylon Petroleum Storage Terminals Limited (CPSTL).

A tanker load of 40,000 metric tons of fuel can be discharged within 24 hours. With the anticipated drop in fuel consumption for thermal energy after the proposed entry of LNG into the energy market, the number of tankers can be also reduced with a substantial cost saving, industry officials said.

The cross-country project was first proposed during 2013-14 but was shelved with the construction of the Muthurajawala oil tank farm, which was augmented by a new oil pipeline at the Sapugaskanda Oil Refinery by CPC (Ceylon Petroleum Corporation) engineers.

However, renewed interest on the project re-surfaced during the tenure of the previous UNP government with then Minister Kabir Hashim presenting to the Cabinet a bid by Langfang-based China Petroleum Pipeline Bureau to build the pipeline at a cost of Rs. 15 billion.

A Malaysian company, which quoted Rs. 7.5 billion for the proposed project was disqualified at the time as its tender documents were apparently “not in order”.

Under the new dispensation, the CPSTL sought the cancellation of the tender awarded to the Chinese company as the CPC engineering team reached the conclusion that they can undertake the job after a new feasibility study and related research were conducted to find alternatives as the estimated Rs. 15 billion cost factor was enormous.

The project could be completed internally within 30 months at a cost of Rs. 5 billion, which translates into a saving of Rs. 10 billion for the country. However, with multiple alternate sources of energy in the offing, it has been determined that it was unviable to implement such a mega project at tremendous cost when another new 18-inch diameter pipeline would suffice to meet the demand.

It doesn’t make sense to call for international tenders to build pipelines when local engineers are capable of achieving the feat, industry officials said. “Of course, there are no fat commissions rolling in when these jobs are handled by Sri Lankan professionals”.

In what industry players described as a “strange twist”, there are continuing overtures to push through the pipeline project in a new game plan to perhaps line the pockets of some officials as the task could be completed for one-third of the estimated cost by local engineers. “With Rs. 10 billion to throw, there will be many on the gravy train if the deal works out!”.

Meanwhile, S. D. J. Paregama, secretary of the Sri Lanka Nidahas Sewaka Sangamaya (Petroleum Branch) expressed concern over moves to revive the project, which, he said, was a waste of public funds at a time the country’s economy was in bad shape.

“After our union wrote to President Rajapaksa on the futility of implementing this costly pipeline project, he directed that it be halted immediately”, he said.

After a bout of silence, there are subtle moves now to push ahead with the project with the Chinese bidder, he claimed.

“As a trade union which supported the President at the last election, we expect him to take a firm stand to ensure that public funds are not squandered on projects that are white elephants”, he emphasized.



Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Pakistan Navy ship arrives in Colombo

Published

on

Pakistan Navy Ship (PNS) Taimur arrived, at the port of Colombo, on a formal visit, yesterday morning (12). The visiting ship was welcomed by the Sri Lanka Navy, in compliance with naval traditions.The 134m-long ship is commanded by Captain M. Yasir Tahir and it is manned by 169 as the ship’s complement.

The Commanding Officer of PNS Taimur is scheduled to call on Commander Western Naval Area, at the Western Naval Command Headquarters, today. The ship is expected to remain in the island, until 15th August, and the crew of the ship will take part in several programmes, organized by the Sri Lanka Navy, to promote cooperation and goodwill between the two navies.

PNS Taimur is also expected to conduct a naval exercise with the Sri Lanka Navy in western seas on its departure on 15th August.

Meanwhile, PNS Tughril, an identical warship belonging to the Pakistan Navy, arrived in Sri Lanka on an official visit on 13th December 2021 and conducted a successful naval exercise with SLNS Sindurala off the western coast on 16th December. Naval exercises of this nature with regional navies will enable each partner to overcome common maritime challenges in the future, through enhanced cooperation.

Continue Reading

News

Stalin reads riot act to govt. over proposal to allow schoolchildren to work part time

Published

on

By Rathindra Kuruwita

The Alliance of Trade Unions and Mass Organisations yesterday warned that the government’s decision to allow schoolchildren, between the ages of 16 and 20, to work part time, would have disastrous consequences.Addressing the media on 11 Aug., General Secretary of the Ceylon Teachers’ Union, Joseph Stalin, said that the government was planning to amend laws, allowing schoolchildren to work in the private sector for 20 hours a week.

“Now, this may look like a progressive idea. A lot of families are

struggling and if another family member can chip in, it would be a great help. I am sure a lot of children feel the same way. It is also true that there may be children who will find great jobs and horn their skills,” he said.However, these proposals have come at a time when education is in crisis and the schools are on the verge of collapse.

“During the last two and a half years, most children have learnt nothing. But children who go to elite schools are doing better. These schools have systems in place, but most others don’t. Children who do not go to tier one schools have suffered and most children who do not go to such elite schools will not find part time work that will prepare them for the jobs of the future,” he said. “It’s not easy to balance school work with vocation training, especially physically intensive work. Most people will drop out and social mobility will further stagnate. Fix the education system first and create a more level playing field,” Stalin said.

Continue Reading

News

Harsha: Will RW use Emergency to steamroller his economic reforms?

Published

on

By Saman Indrajith

SJB MP Harsha de Silva yesterday asked President Ranil Wickremesinghe whether the latter was planning to use Emergency powers to suppress the people who might oppose his economic reform agenda.

“It is being asked why the government wants to continue the State of Emergency. The anti-government protesters have gone home. There is no unrest. There are those who say that the President wants to keep the Emergency laws to carry out economic reforms. Does that mean the President will use these laws to scare people into submission if they do not accept his economic reforms? I don’t think people can be intimidated. I want the President to answer this question,” he said.

MP de Silva said that the government did not have public support and that it was obvious that the spectre of the Rajapaksas was haunting the government.

“I agree that Wickremesinghe was appointed constitutionally. We have to work within the Constitution. However, the 134 votes he received on 20 July were not realistic. They have managed to manipulate the Constitution, but the government doesn’t have the support of the people. The problem is can the government win the support of the people,” he said.The SJB lawmaker added that Sri Lanka needed to restructure its debt. However, the country had not even started the process.

“One of the consultants we hired, Lazard, says that we have to start with China because it is new to debt restructuring. But we have not done so. Not only that, we have in fact started a diplomatic issue with China. What’s the front page news today? Can this government solve this sensitive international issue? Can it carry out the necessary economic reforms?” he asked.

MP de Silva said that the government had to work with the people and that it had to be honest with them. The government needed to present a common programme on which an all party government could be established.

“In 2020, we said that the government was on the wrong path and that we needed to seek IMF assistance. The government didn’t listen. We need an all-party programme to go before the IMF and get a decent deal. Today, I present to Parliament an economic recovery plan we have prepared. When we decided to throw our weight behind SLPP MP Dullas Alahapperuma, I was entrusted with the task of making an economic plan. We have run it through experts too. I ask the MPs to look at this and suggest improvements.”

Continue Reading

Trending