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28th June 2007

Sri Lanka national line to buy cargo ship

June 28 (LBO) Sri Lanka’s national shipping line has shelved plans to acquire a tanker for crude oil imports and is going ahead with the purchase of a cargo vessel to supply the northern Jaffna peninsula, an official said

Ceylon Shipping Corporation (CSC) officials said a cargo ship is the more urgent requirement because of the need to ship food, medicine and other provisions to Jaffna which can only be supplied by sea and air.

More vessels are required to maintain a regular flow of goods to Jaffna and prevent shortages such as that caused last year when the resumption of hostilities with the Tamil Tiger suddenly closed the road to Jaffna.

The CSC, which has turned around in recent years after more than a decade of losses, will use its own funds as well as that provided by the government and through loans to buy the ship.

The government has actually approved the purchase of up to three vessels by the CSC with the strategic aim of building up the national fleet.

“A second-hand cargo vessel would cost around 3-4 million dollars. We can invest part of the money and borrow the rest,” a CSC official said.

The corporation was holding talks with banks as well as with other ministries like the Ministry of Nation Building and Development to raise the funds.

CSC officials said the importance of a national fleet would be particularly felt at times of crisis when other shipping lines might not be available.

The corporation's finances were now healthy after a long period of being in the red because of political interference and bad decision making.

The CSC's earlier plans to build up a national fleet were also affected by changes in the shipping industry such as deregulation and mergers which made it difficult to compete against better endowed commercial lines.

The corporation also had plans earlier this year to buy an oil tanker to ship crude oil from Iran and other Gulf origins for the Ceylon Petroleum Corporation (CPC).

Iran’s Ministry of Transport had even agreed to a special long-term credit line to finance the purchase of a vessel.

The requirement was for a vessel that can carry 95,000-100,000 tonnes of crude oil.

But the plan has been shelved because of uncertainties about the CPC's oil imports.

CSC officials said they need to clinch a long-term supply contract with the CPC in order to go ahead with the purchase of a tanker.

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