China Eximbank provides $72 million loan for Muthurajawela Oil Tank Farm Project (Linked to Record ID#70565)

Project narrative

On January 17, 2001, China Eximbank and the Government of Sri Lanka signed a $72 million loan agreement for the Muthurajawela Tank Farm Project. The loan carried the following borrowing terms: a maturity of 20 years, a grace period of 5 years, and a 4.2% interest rate. The borrower was expected to use the loan proceeds to finance 90% of the cost of a $79,528,000 commercial (EPC) contract. The remaining 10% was to be funded by Ceylon Petroleum Corporation (CPC). The borrower made repayments worth $5,617,530.46 (Rs. 733,575,327) in 2014 and $5,617,530.46 (Rs. 746,091,554) in 2015. The loan's amount outstanding was $17,083,525.57 (Rs. 2,206,265,577) as of December 31, 2013, $11,288,805.10 (Rs. 1,474,168,934) as of December 31, 2014, and $5,958,954.72 (Rs. 810,280,191) as of December 31, 2015. The project involved an onshore component and an offshore component. The onshore component of the project involved 29 diesel and kerosene storage tanks and all the matching facilities. The offshore component of the project involved a one-point mooring system and a 5.6 km submarine oil transmission pipeline. China Huanqiu Contracting & Engineering Corporation — a construction subsidiary of China National Petroleum Corporation specializing in the construction of refineries and chemical fertilizer plants connected to refineries, and mining plants — was the EPC contractor responsible for project implementation. Project implementation began on July 1, 2001 and ended on November 28, 2003 (two months ahead of schedule). The Muthurajawela tank farm became operational on May 27, 2004. With the construction of this tank farm, Sri Lanka’s storage capacity for finished petroleum products increased by 250,000 tonnes. Muthurajawela tank farm consists of 21 tanks of 10,000 m3 capacity and 8 tanks of 5,000 m3 capacity. These tanks store and distribute diesel and kerosene. Along with the tanks, CPC installed a new SPBM system, where 60,000 DWT (deadweight tonnage) ships could use the buoy for discharging imported finished products direct from sea to tanks via a submarine pipeline. This terminal includes a loading facility to distribute products by road tankers. However, rail transportation of petroleum products stored in the Muthurajawela tank farm is constrained due to the absence of a railway line. At the time of project completion, a dual pipeline transport systems named the ‘cross country pipeline’ with a length of 6.5 km was expected to link Muthurajawela tank farm with the Supugaskanda facility.