Vitol warns its suspension will cost CPC dear

CPC assures quality product, uninterrupted supply

By Shamindra Ferdinando

Vitol Group of Companies yesterday warned that CPC’s decision to prevent it from taking part in the tender process, on the basis of an unsubstantiated allegation that it supplied a consignment o low quality diesel late last month, could cause heavy losses to the CPC.

Authoritative sources told The Island yesterday that since the suspension of Vitol’s participation in the tender process, about a month ago, the CPC hadn’t considered three bids made by the company, hence taking substantial losses.

Vitol has been doing business in Sri Lanka for about 40 years. Responding to a query, sources stressed that CPC’s other suppliers couldn’t compete with offers made by Vitol, a major regional and international supplier. The difference between the offers made by Vitol and the second lowest bidder in the three transactions could be as much as Rs. 150 mn, sources said.

Vitol is contemplating taking legal action against the CPC over its suspension on what a spokesperson for the company called, unproven allegations.

The Petroleum Industries Ministry yesterday assured consumers of an uninterrupted supply of quality petroleum products as a tanker carrying 35,000 MT of petrol arrived at the Colombo harbour yesterday.

Sources said that the CPC had adequate stocks and the arrival of fresh stocks would further improve the reserve level.

Sources revealed that when offers for two CPC tenders were called on Aug. 14, Vitol’s offer wasn’t even considered, though it was $ 1 mn less than the best offer made by its competitors. But, ENOC (UAE-based Emirates National Oil Company), under fire over the supply of 20,000 MT of 92 RON gasoline and 15,000 MT of 0.25% sulfur gas oil last year, too, was allowed to participate in the bidding process.

According to company sources, since re-admission of Vitol over a year ago, it had won over 20 bids by offering the lowest prices. The bottom line was that the difference between prices quoted by Vitol and its competitors was about $ 4 mn. The company also recalled that Vitol had been the only bidder in a number of tenders when CPC was short of product and the country risked severe shortages.

The company alleged that the CPC had deprived it of the opportunity to participate in the ongoing inquiry into the alleged import of 20,000 MT of contaminated diesel or 23.8 mn litres. The CPC had ignored Vitol’s offer of the services of an internationally renowned quality expert to help with the investigation, though it was accused of supplying petroleum products contaminated with an unknown substance.

The company challenged the CPC to produce any evidence it may have found during investigations to substantiate allegations as regards contaminated fuel.

Vitol also questioned the impartiality of the inquiry as it had been denied an opportunity to conduct joint retesting of the sample in keeping with standard industry practice in case of disputes over quality.

Vitol said in a statement: "We are not aware of any other sampling or testing done by CPC to identify the other possible sources of the contamination eg cargoes from other suppliers or material introduced in the domestic SL supply and distribution chain. We understand that the sample that CPC has sent abroad for testing is one from a shore-tank that contained both cargo supplied by Vitol and previous suppliers thus rendering any test results (which we have not been asked to witness as is the industry norm) completely invalid. The mixing with chemical or microbial substances is a perfectly plausible explanation for the incidents of damage alleged, but such contamination could have occurred in the local supply system or in cargoes supplied by others. We note that the Chairman of SLPA had stated that they received a parcel of contaminated diesel from another supplier. The Vitol supplied cargo that was tested in line with international standards and found to meet the required quality specifications and did not contain any microbial growth or non mineral oil chemicals."

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