Testing CPC

PUBLIC notices are usually about as enjoyable as poking one’s eyes out, but on Tuesday Vitol, the world’s largest oil retailer, currently locked in a dispute with the Ceylon Petroleum Corporation (CPC) over substandard fuel imports, decided to clear the air and made for some very interesting reading. The notice also raised strong questions over the CPC’s testing procedures that have failed several times to detent flawed fuel.   

The Vitol Group of Companies strongly refuted the allegation that the diesel it supplied caused the reported incidents of damage to vehicles and machinery. The group also denied the allegations that have been made about its reinstatement as a registered supplier to the CPC following its suspension in 2009.

According to the explanation published by the company on the diesel supplied on 22 July 2012, the stock came from a larger parcel of product which has been supplied to a number of Vitol’s customers in the region where it has been consumed without incident and found to be fully on specification. The company goes onto insist that the cargo in question was tested to international standards by the CPC’s own inspectors before it was approved for discharge by the CPC itself.

The statement quotes Ceylon Petroleum Storage Terminals Limited Chairman as categorically stating that the product supplied by Vitol were repeatedly tested and found to be compliant with the contractual specifications.

CPC has not yet established the source and nature of the contaminant but it is clear that contamination could have occurred at any of a number of points between the terminal and the end consumer. Vitol points out that the fuel was discharged into tanks that contained other products previously supplied before passing into the downstream supply chain over which Vitol has no control.

The company then points out that to date there has been no evidence linking Vitol cargo to the substandard fuel and that the CPC has not advised or invited Vitol to participate in a re-testing of the retained cargo samples. CPC has also not advised Vitol of any other sampling and testing further down the domestic Sri Lankan logistical supply chain to try and establish the source of the contamination.

Dealing with the issue of relisting the company recalls that the quality dispute in 2009 also took place after the CPC tested the oil and approved that it met international standards. Vitol pointed out that in this instance too CPC never pursued the company for a breach of contract despite it being suspended for two years. CPC also failed to provide Vitol with any test results after the cargo had been discharged; nor did it request the company to participate in any re-testing of the retained cargo.

The notice goes on to deny that the US$ 100,000 paid to the CPC was a fine and terms it as merely a “goodwill payment”. Since the lifting of the suspension Vitol has won 22 tenders.  

Readers will also remember that last year the Sri Lankan Government withheld payment from Emirates National Oil Company after several thousand complaints of substandard fuel were lodged by consumers. The widespread issue also failed to highlight why testing done by the CPC failed to detect the substandard quality of the fuel before it was released to the market. A second cargo of low quality jet fuel was also detected several months later but how it stumped tests was also left unanswered.

Therefore, it is clear that irrespective of what company fuel is bought from, the CPC testing procedures need to be upgraded if future disasters are to be avoided.