ENOC fuel supplies to CPC: No smoke without fire

Wednesday, 3 July 2013 00:02 -     - {{hitsCtrl.values.hits}}

  • Dubai-based supplier claims CPC officials were informed fuel did not meet quality specifications in 2011
  • CPC requests supply of any available gasoline to address critical shortage in SL
  • ENOC says it received full payment for sub-standard cargo but made a nominal monetary compensation following controversy
By Dharisha Bastians The Ceylon Petroleum Corporation purchased fuel from the Emirates National Oil Company (ENOC) in July 2011 even after the Dubai-based firm had informed officials in Colombo that they did not possess gasoline that met CPC specifications, a spokesman for the Company said. The sub-standard fuel supply resulted in Sri Lankan motorists complaining that contaminated petrol had damaged their vehicles in 2011 and led CPC to blacklist ENOC as a supplier. CPC has consistently blamed the supplier for issuing contaminated fuel leading to the damage to vehicles. “In 2011, following a critically low stock position, CPC had requested ENOC to supply gasoline urgently. ENOC informed CPC that it did not have gasoline that met CPC’s specifications but was subsequently requested to supply any available gasoline component stock to CPC to address the gasoline shortage situation in Sri Lanka,” the ENOC Spokesman said. The company said the specifications of ENOC’s available gasoline component stock had been made known to and expressly set out in a Free on Board (FOB) contract between CPC and the Dubai supplier. “CPC agreed to purchase the gasoline component cargo in accordance with the specifications in the said contract and chartered its own vessel to transport the gasoline component cargo from ENOC’s terminal,” the Spokesman said. ENOC said the cargo had been subject to inspection by an independent inspector mutually agreed by ENOC and CPC. “A quality certificate was issued by the inspector and was provided to CPC prior to loading,” the statement said. While the CPC claimed it had withheld payment for the 20,000 tons of cargo supplied by ENOC in 2011, the Dubai-based oil company said that it had received full payment for the shipment from CPC on the due date of payment, as per the contract. According to the company spokesman, ENOC agreed to make a nominal monetary compensation to CPC as a matter of goodwill in view of concerns raised with regard to the quality of the gasoline cargo. “The compensation was made on the reiterated basis that ENOC had at all times complied with contractual specifications and without admission of any liability,” the statement said. ENOC said it was discussing with authorities on a future course of action in this regard. The statement marks the first time the once blacklisted oil company has presented its view of the contaminated cargo supplied in 2011. Petroleum Minister Anura Priyadharshana Yapa has claimed that ENOC was put back on the CPC supplier list after it had paid damages for the consignment. The statement from the company came after CPC rejected a cargo of 40,000 tons of diesel supplied by ENOC last week because it did not meet specifications upon inspection in the Colombo Port. In its statement ENOC said the cargo had been inspected and verified as conforming to contractual specifications by an independent inspector mutually agreed by ENOC and CPC at the port of loading. “A different independent inspector inspected the cargo at the discharge port of Colombo, who reported that one of the parameters was not as per contractual specifications. Due to the nature of petroleum products, inspection results taken at load port and discharge port may vary due to a number of reasons. We are currently investigating the reason for the variation of the test results, and a detailed report is awaited,” the ENOC Spokesman said. It added that following the inspector’s report and pending ENOC’s investigation, CPC had requested ENOC to provide an alternate cargo. “As requested, ENOC promptly made arrangements for an alternate cargo to be delivered. In the course of making the necessary arrangements, ENOC was informed that CPC no longer required the alternate cargo,” the Spokesman added. The Petroleum Minister said the Cargo had been immediately discharged and the supplying company blacklisted. “Significantly, CPC has not suffered any actual damages or losses as no cargo has been discharged, unlike reports by a section of the media,” ENOC said. As reported in Daily FT yesterday, serious doubts have been raised in senior Government circles about the credibility of the inspection conducted in Colombo into the most recent ENOC shipment. The discrepancy between the two tests performed in Colombo and the UAE pre-loading were technically impossible, senior Government sources said. Sabotage is suspected in the testing at the Colombo end, to help a non-government private sector supplier eliminate competition from the UAE Government-owned company, which had won a large number of tenders for supplies to the Ceylon Petroleum Corporation (CPC). ENOC supplied gasoline to CPC without complaint at prices lower than other tender applicants, the sources said.