Bunker Supply

Sept 11, 2008 (LBO) – Ship fuel prices at Colombo port could fall by around five percent after a tank farm previously operated by one player is converted to a common storage facility, a supplier has said. Lanka Marine Services (LMS), a unit of John Keells Holdings was ordered to return a tank farm and land to Sri Lanka Ports Authority (SLPA) by the island’s Supreme Court which said transfer of the tanks as part of a privatization deal was flawed.

Ship fuel suppliers, including LMS, have formed an association and are now proposing to share the facility, though capacity is likely to be fragmented.

Lanka Marine Services said it would complete handing over the premises yesterday, with the court having given the firm till September 12 to move its oil stocks out.

Expensive

Ship fuel, also called bunker fuel, is estimated to be about 20 percent more expensive at Colombo than at regional hub ports like Singapore.

A top bunker supplier says sharing the onshore storage facility will increase competition.

“That’s the way to go, to bring prices down,” says Mohamed Reza, who heads Lanka Maritime Services, a unit of Sri Lanka Shipping Company which had operated without on-shore