Last week, Sri Lankans woke up to a revelation that the mere rumour or news of a petrol shortage could spread panic and wreak havoc, like a maniac at the wheel of an over-speeding vehicle. The actual petrol shortage, when it came, sent the masses into a spin. Filling stations had queues that would have made the popular dansals green with envy. Curses poured freely from the hysteric masses returning empty handed after standing in a queue for hours at a time. By Wednesday (8), the dejected masses had no option but to await for that blessed ship, Neveska Lady bringing the consignment of petrol. As one social media user humorously put, it was the most awaited ship since Arahant Sangamitta reached shores, carrying the sapling of Jaya Sri Maha Bodhi.
The first signs
The first signal of a crisis surfaced with the long queues observed at filling stations in Colombo, closely followed by the speculations of a fuel shortage, on Friday (3). By Saturday, the nation was in a state of uproar, with an ever increasing demand for petrol, as the panicked public attempted to stock as much petrol as they could. This panic buying resulted in a further increase in demand, and the shortage became very real.
What actually happened
While apologizing to the public for inconvenience caused due to the fuel shortage on Monday (6), Minister of Petroleum Resources Development, Arjuna Ranatunga requested the public to refrain from panic buying which has contributed to a rapid depletion of the existing stock. The Minister assured that there are sufficient stocks to maintain the supply until the shipment arrived on November 8, and distribution commenced on November 9.
Minister Ranatunga further said that the situation began with the Ceylon Petroleum Corporation (CPC) rejecting a shipment of oil imported by Lanka IOC PLC(LIOC), on October 17, since the consignment failed to meet the gasoline import specification of Sri Lanka. He added that this ship is still anchored at the Trincomalee harbour.
“At the same time, a shipment of oil that was due for CPC, which was expected between October 31 and November 2, was delayed. LIOC offered another shipment of gasoline and diesel, of which diesel stock failed to meet the requirement and thus was rejected. One odd coincidence was that operations of the Sapugaskanda refinery were interrupted due to an electric failure, during the period, which resulted in a production loss for three days.Now the refinery has resumed operations,” he said.
Minister Ranatunga emphasized that if not for the SMS that went viral, informing the public of the shortage, which triggered the public to rush into panic buying and stocking up of petrol, the situation would have been managed by the authorities.
Measures bythe authorities
It was reported that a Cabinet subcommittee was appointed by President Maithripala Sirisena, as per requested by Minister Ranatunga, to probe the fuel shortage. This includes investigating into the arrival of substandard oil consignment in the country, the interruptions at Sapugaskanda refinery and whether there was a delay in ordering the expected fuel stock. The sub-committee comprises Minister of Megapolis and Western Development PataliChampika Ranawaka, Minister of Disaster Management Anura Priyadarshana Yapa and Special Assignments Minister Dr. Sarath Amunugama.
At the same time, Parliamentarian Nalin Bandara said that Prime Minister Ranil Wickremesinghe has requested an immediate report on the fuel crisis, from all stakeholders. Accordingly, the report will be looking into whether the fuel crisis was created as a conspiracy against the Government.
A circular that was issued by the Ministry ofPetroleum Resources Development, prohibiting issue of petrol to bottles, cans and other objects, had to be withdrawn after being subjected to criticism by the consumers. The circular was initially issued to manage the petrol stocks available to vehicles from further depletion due to collection to cans and bottles.
Losses incurred
According to Ministry of Petroleum Resources Development, Secretary, Upali Marasinghe, under normal conditions, CPC distributes four million litres of petroleum on average, per day, of which, daily average consumption is approximately 3.5 million liters.
“We incur losses when we supply to fuel to market due to Government subsidies. There is a six rupee loss per liter of diesel, 14 rupee loss per liter of petrol and a 25 rupee loss per liter of Kerosene,” he said.
He added that no extra losses were incurred due to the shortage.
Stance of the LIOC
LIOC, Managing Director, Shyam Bohra refuted the allegations against the company, saying to the media that the Company owns only 16% of market share, and that they maintain sufficient stocks to meet their requirements up to 20 to 25 days. At the same time, Bohra declared that ship anchored at Trincomalee does not belong to them and also, that the rejected consignment was returned to Total Company, their supply.
“If the supplier fails to supply good oil, we have to take action against them, but this is not intentional on the supplier’s part too,” he said.
Ministry of Petroleum Resources Development, Secretary, Upali Marasinghe responded, saying that LIOC statement which says that the ship anchored in Trincomalee does not belong to them, is laughable.
“The ship may not belong to them, but it holds the rejected consignment of oil ordered by them,” he said.
When prompted whether any legal action will be taken against LIOC, Marasinghe said that Ministry has no power over LIOC, since the agreement with the Company took place on Government level.
“If the Ministry inquires into the matter, it will give rise to diplomatic issues. At the same time, we have not finalized who the actual culprit is. Depending on the report by the Cabinet subcommittee, appointed by the President, relevant action will be taken,” he said.
The most awaited ship
Fuel tanker, Neveska Lady arrived from Dubai on Wednesday (8), carrying the delayed CPC consignment 40,000 metric tonnes of petrol. According to Marasinghe , the consignment contained 32,500 metric tons of 92 Octane and 7,500 metric tons of 95 Octane. “We could not distribute in the afternoon of 9th as planned, since we had to leave oil to stabilize before commencing distribution in the late evening,” he said.
Another ship arrived from India on (11), carryinga consignment of petrol for LIOC and Indian Government has assured all possible assistance and further shipments of petrol if necessary.
Petroleum Joint Union Alliance, Convener, D J Rajakaruna questions why LIOC failed to request this ship earlier in the week, when the crisis first broke out.
In the midst of the crisis
The petrol queue for the filling station, near Lotus Roundabout in Colombo, was approximately 2 km in length, on Tuesday (7), as per media reports. To manage the order at filling stations, extra task force from the police was deployed. “We deployed maximum numbers of traffic police and normal duty members at fuel stations all over the country. These numbers were temporarily removed from other duty stations. Petrol queues took up one out of two lanes, causing inconvenience within the proximity of fuel stations,” said DIG Traffic, Chula de Silva.
Meanwhile, traffic police sources disclosed that in addition to maintaining traffic at the fuel stations, Police had to intervene in the small scalefights that break out, which were quite frequent.
Some of the hassled public waiting in the lengthy queue at the Ceypetco filling station in Slave Island, near Cinnamon Lakeside, voiced their views as follows.
Daminda Asela, a resident of Maradana, said that he had no issue with petrol shortage since, come January, it will be the 225 Ministers who will be standing in the queue looking for a vote.
“The day is over after we stand in the queue. I have waited in queue from 5.30 a.m to 10 a.m to witness owner turning away the supply bowser saying the filling station was overcrowded,” he said. Sampath Senadeera from Ragama said that he could not pump fuel on Tue (7), even after waiting in the queue in Thimbirigasyaya filling station from 9.30 am to 5.30pm.
Rathnasiri from Mount Lavinia said that he has been in queue from 4 am to get petrol and it was past noon by the time he finally secured petrol. “Why do we need a Government if they can’t even manage to keep a stock of petrol adequate for a week? We elected them to run the country,” he said.
Rathnasiri added that it is the common man who suffers. “Ministers have no shortage, we will like to know one Minister who stayed in a petrol queue,” he declared. In a tragic turn of events, there was report of man has collapsing dead, suffering from a heart attack, after quarreling for petrol at Uragasmanhandiya Lanka Seva fuel station, on Tuesday (7).
As with all things, there is a community that thrives in crisis ridden situations. Certain three-wheeler drivers derived the maximum out of the shortage by charging the stranded commuters higher for their services. At the same time, a black market trade for petrol emerged overnight, in many areas.
Daminda said that black market petrol is available, in Colombo area, priced as high as Rs. 250 perliter. “These people have collected petrol for cans and bottles and sells for higher prices,” he said.
Who is the true culprit
Speaking on the breakout of the crisis, Marasinghealso maintained that if not for the panic spread by the SMS that was circulated, supply could have been maintained without issue. “We managed stocks from October 18 until the evening of November 3 even under the shortage. Because of the SMS, people started collecting buffer stock, which was one reason for the rapid draining of petrol from the market,” he said.
University of Colombo, Professor of Economics, Sirimal Abeyratne said that country has come to a pathetic situation where people would trust a SMS to the word of authorities.
Marasinghe said that top level investigations will be carried out into the origin of the SMS, which worsened the situation. Further, separate investigations will be carried out by the Ministry on the reasons which led to interruptions at the Sapugaskanda refinery. According to CPC sources, the reason for the failure lies with an issue with a UPS.
Precautions for the future
CPC currently holds 84 per cent of the market share. Given this, one criticism that surfaced was the failure to maintain an adequate storage facility by the CPC.
“Sad thing about this crisis is that a single oil ship could shape the economy, we realized that CPC lack buffer stock even to manage for two or three days,” said Abeyratne.
Abeyratne further said that past few years was the best time to initiate managing such a stock. “For one thing, during the last two or three years, the price of a crude oil barrel came down to US$ 50, from US$ 160, 10 years ago,” he said.
Abeyratne emphasized that existence of a buffer stock is important, in case the crisis in Middle East grows in the future, or in the case some unexpected event unfolds in oil producing countries. “Without buffer stock, this would have a severe impact on our economy and serve to reduce even the investments,” he said.
Marasing headmitted that Ministry has understood the necessity for more storage capacity. Accordingly, they have begun the process to expand the storage facilities in Kolonnawa and Muthurajawela terminals.
“This process will take two years and is still undergoing Tender procedure and needs Cabinet approval. This includes a tank with a capacity of 15,000 cubic meters, at Kolonnawa terminal. The expected expenditure for this is Rs 450 million,” he said.
At the same time, he adds that the process of building a 12 inched pipeline from Harbour to Kolonnawa terminal is, 95 per cent completed at the moment, and will be completed by March 2018. The tentative investment of the project is Rs. 600 million.
“This pipeline can bear more pumping pressure and will considerably reduce the time taken for pumping oil from ship to terminal. Currently, it takes from three to four days to pump petrol.With the new pipeline, there will be a 40 per cent increase in unloading time,” he said.
Marasinghe adds that the significance of the pipeline lies in the reduction in the time a ship has to be docked at the harbor. “Therefore, we can bring more ships since harbor would be emptied sooner,” he said.
Petroleum Joint Union Alliance, Convener, D J Rajakaruna said that one solution for Storage will be CPC taking over some of the storage tanks in China Bay, leased out to LIOC by the Government in 2003. “This is not a valid agreement;it says the actual lease agreement will be executed within six months, which was not carried out. Also, LIOC only uses eight out of the 99 tanks there,” he said.
Rajakaruna added that by utilizing storage in China Bay, transport cost can be saved up to Rs. 1,500 million.
Marasinghe disclosed that Ministry has recognized the need to carry out diplomatic level discussions with Indian Government to learn whether CPC can use the storage capacity in China Bay, since 2003 agreement with India was on Government level.
“If we can get back 15 to 20 tanks, it will be easier to maintain the stock,” he said. 