Oil tank contracts to be awarded

[TamilNet, Saturday, 21 June 1997, 23:59 GMT]
The Sri Lankan government is to award contracts to rebuild the oil tanks attacked and destroyed in October 1995. The contracts are worth over 40 million US dollars, and the government is considering tenders for the work scheduled to begin in September. However, the government has had to borrow 24 million US dollars, and raise the rest itself.

The state-owned Ceylon Petroleum Corporation (CPC) will award the tender to repair the Kolunnawa and Orugodwatta tank farms, destroyed in October 1995, to one of a number of international bidders from Japan, South Korea, Italy, China and Singapore.

In a dawn raid, guerrillas slipped into the two depots and planted explosive charges on several tanks. At least 16 tanks were destroyed in the resultant explosions or after being hit by rocket propelled grenades. the flames from the burning fuel lit up the Colombo skyline, as explosions sparked a panic. Up to two thousand people tried to flee the city. A curfew was imposed to stop looting in the wake of the panic.

The attackers also engaged army reinforcements, killing 20 troops. Seven of the guerrillas were also killed, but most escaped in the vehicles they arrived in. Up to 30 people were injured, including the BBC correspondent, George Arney, who was shot in the neck by a Sri Lankan soldier.

It is alleged that the Black Tigers, an elite unit of the LTTE were responsible. However, the LTTE has not claimed responsibility for the daring attack which caused widespread damage to the vital installations and the government's prestige.

The fires blazed for nearly two days, and were only extinguished with the assistance of Indian firefighters, hurriedly flown in with chemicals and equipment. Up to an estimated 30 million US dollars worth of fuel was lost.

The attack came barely two days after the Shell Cooperation took over the controlling interest of the Colombo Gas and Water company in one of the Sri Lankan government's first privatisations, carried out to raise funds for the war against the Tamil Tigers.

Almost immediately, petrol was rationed across the country as nervous civilians queued to fill up ahead of the expected shortage: the government ordered fuel stations not to sell to private motorists, but to only supply the military and the emergency services.

Apart from the damage to the installations, the Sri Lankan government's ability to store fuel was considerably reduced, forcing it to buy smaller parcels of fuel, at a higher cost than it would otherwise have. The government's privatisation plans were also badly hit as investors shied away.

It is understood that the there was some disagreement between the government and the insurers of the tank farms. The government vehemently claimed that the LTTE was responsible for the attack. However, this would have made the destruction an act of war, thereby absolving the insurers of any liability. Nevertheless the government is said to have demanded that the insurers pay out.

The funds for the repairs have eventually been partly raised by a soft loan of 24 million US dollars from the Asian Development Bank. It is up to the CPC to raise the remainder.

Immediately after the attack, government ministers vowed to restore the tank farms to full operational capability 'within months', despite the skepticism of observers. However, work is not expected to begin until September, nearly two years after the tanks were destroyed.