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| Sunday, 23 June 2002 |
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Rs. 3b over 5 years to expand Trinco oil tanks The Indian Oil Corporation (IOC) will enter the Sri Lankan market as a result of the Memorandum of Understanding signed between the Government of Sri Lanka and India. It will take over and develop the oil tank farm in Trincomalee. The company will initially spend over Rs. 200 million to refurbish about 15 tanks. In the next five years, another Rs. 3,000 million is expected to be spent on a phased programme. Here, Nalin Pathikirikorale, Chairman of Lankapro (Ceylon) Ltd., the agent for IOC in Sri Lanka, speaks to the Sunday Observer about the company's plans for Sri Lanka. Question: Tell us about the Indian Oil Corporation. Answer: The Indian Oil Corporation is a Fortune 500 company and is India's largest oil company, with more than 82 per cent of its equity held by the Government of India. It is one of the most admired organisations in the country for its efficiency of operations, customer service, management and most important, for its ability to balance objectives of commercial enterprise and development of the petroleum sector in the country. Q: What plans does the IOC have for the development of the oil tanks in Trincomalee? A: IOC is a well managed and commercially orientated corporate giant. It has no political agenda, as claimed by some. The company hopes to initially spend over Rs. 200 million to refurbish about 15 tanks which could be used to store its products for distribution in the North and East. During the next five years, on a phased programme, it will spend another Rs. 3,000 million to bring the balance of the tanks to useable level. This would include a modern jetty and pumping facilities. The IOC has estimated a recurrent expenditure of Rs. 100 million per year on this project. Once the tank farm is fully developed, the company will look at commercially leasing the tanks which it will not use, to other international trading companies. Q: How will local customers benefit by IOC's entry? A: IOC understands the importance of healthy competitive forces in this business. Its conduct and performance in the Indian market reflects its attitude as a socio-economically responsible corporation. It believes that its operations in Sri Lanka will provide choice to customers and prompt all-round development and is committed to the reform and development of the entire petro-chemical sector of Sri Lanka. Q: What kind of service can customers expect from IOC? A: IOC believes that the final benefit of a positive reform process should accrue to the customer in the form of better customer services. With its experience in operating more than 21,000 retail outlets for transport fuels, kerosene, LPG and lubes and innovative concepts of convenience, ATMs, food outlets retail outlets as well as the concept of attractive and successful jubilee retail outlets (large format retail outlets), IOC has realigned itself in a manner that enables it to compare its level of service to other international players. Q: How about the quality of product? A: IOC expects to provide better quality fuel which should result in the improvement of the product quality. Q: There are reports that the LTTE has protested over the lease of the tanks to IOC. Can you comment? A: I do not believe that the LTTE will protest over the development of the North and East. The development of the tanks will provide employment to many in Trincomalee and this would be welcomed by everybody including the LTTE. Investment in such large amounts has not happened in that part of Sri Lanka for a long time. Such investment can only empower the people of the Eastern Province and raise their living standards. Therefore, I do not think that the LTTE will object to IOC's presence. Q: What about energy security in Sri Lanka? A: Petroleum is an important sector that has significant bearing on the nation's security environment. IOC has demonstrated that it can play an important role in the development of energy security in India. Its entry is expected to provide enhanced energy security in Sri Lanka. This involves critical evaluation and enhancement of the petroleum product capacity in the island. It would also involve improved efficiencies in the product delivery system within the country. Additional energy security for Sri Lanka will be through storage capacity of nearly 6.5 million KL that the IOC currently manages and operates. Q: What are IOC's views on the current state of the petroleum industry in Sri Lanka? A: The IOC is committed to working with the Government of Sri Lanka in evolving an efficient and developed petroleum sector in the country. This involves commitment of resources from IOC with expectations of returns on investment over a longer time frame. The company is keenly looking forward to constructive reforms in the petroleum sector in Sri Lanka and believes that its own experience of successful transition from operating in a regulated market to a free market environment in India would prove very useful to the Sri Lankan Government. Q: When State monopolies are sold, consumers worry as to how their interests will be protected as against those of stakeholders. How will IOC protect consumers interests? A: IOC will actively participate in the reform process in Sri Lanka's petroleum sector to protect consumers' interests. Protecting the interests of all strata of society and making available products to far-flung areas and difficult terrain will be the cornerstones of equitable development. IOC will also assist in framing policy and other checks and balances to ensure the right quality of products to end-users if invited to do so by the Government. Q: How will IOC's entry affect the Ceylon Petroleum Corporation (CPC) and its operations here? A: In the spirit of partnership and its long-term commitment to the sector, IOC will work along with the CPC and provide technical know-how for overall improvements in the refinery. Such know-how could be specifically targeted to produce low sulphur gas oil, increase the yield of high value products, revamp and automate the refinery process and turn around maintenance. This would also include training of CPC engineers and managers by IOC. |
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