Govt. outlines Rs. 46.7 b oil storage expansion drive amid global supply uncertainty

• Allocates Rs. 31.96 b specifically for construction and refurbishment of oil storage tanks
• Five oil tank projects, including 24 in Trincomalee and naphtha pipeline connecting Kolonnawa to Kelanitissa, to be completed next year
• Jet A1 storage facility in Muthurajawela and construction of oil pipeline linking Kolonnawa to Colombo Port to be completed by 2028

By Charumini de Silva

The Government has embarked on a major three-year initiative to expand its fuel storage capacity and strengthen petroleum infrastructure, allocating Rs. 46.7 billion between 2025 and 2028 for new oil tanks, pipeline upgrades, and related facilities.

Announcing the initiative at the weekly post-Cabinet meeting media briefing, Cabinet Spokesman and Minister Dr. Nalinda Jayatissa said the investment is aimed at improving the country’s energy security and increasing storage capacity to cushion against global supply 

disruptions.

Of the total allocation, Rs. 31.96 billion has been earmarked specifically for the construction and refurbishment of oil storage tanks, with most tenders already called during 2025. The expansion includes several key projects at strategic fuel storage locations.

“Six new tanks are currently being constructed in Kolonnawa, with work commencing in 2025 and scheduled for completion next year. Once completed, these tanks will add around 64,000 tons to the country’s fuel storage capacity. In parallel, two existing tanks, numbers 30 and 31 at the Kolonnawa facility, are undergoing refurbishment, which is expected to add a further 21,000 tons of storage capacity by next year,” he said, adding that the Government is also moving ahead with the development of Kolonnawa Zone 7, while three additional storage tanks are being constructed in Muthurajawela. 

“These four projects alone account for an investment exceeding Rs. 10 billion and are expected to be completed during next year,” Dr. Jayatissa stressed. 

Beyond tank construction, the initiative includes significant upgrades to fuel transportation infrastructure. “A new 12-inch naphtha pipeline connecting Kolonnawa to the Kelanitissa power complex is currently under construction and is expected to be completed by 2027. Another major component involves the development of 24 storage tanks in the China Bay complex in Trincomalee with a cost Rs. 7.3 billion, which will add a substantial 300,000 tons of storage capacity once operational next year,” he said.

Dr. Jayatissa said two additional large-scale projects are scheduled to be completed by 2028. “One involves the development of Jet A1 aviation fuel storage facilities in Muthurajawela at a cost of Rs. 16.3 billion, while the other includes the construction of a new oil pipeline linking Kolonnawa to the Colombo Port to improve fuel logistics and distribution,” he added.

The Cabinet Spokesman noted that while several tenders had already been awarded, certain projects had to be re-tendered, noting that infrastructure development of this scale requires time and careful procurement processes.

He said the broader objective of the initiative is to expand national storage capacity sufficiently to extend the country’s fuel reserve period by at least an additional week beyond current levels. 

“Strengthening storage capacity is increasingly seen as vital given global geopolitical tensions and volatility in international energy markets. This is something the previous administrations had neglected. The initiative therefore marks one of the largest recent upgrades to petroleum infrastructure and reflects a broader policy push to strengthen energy security while reducing vulnerability to global supply shocks,” he pointed out.