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Lanka IOC Plc., the Sri Lankan subsidiary of Indian Oil Corp, is aiming to increase sales of marine fuel by targeting ships passing the island, according to local reports.

The company is reported to be looking to supply bunker fuel to vessels passing Sri Lanka on the main East-West trade route that do not necessarily call at the the port of Colombo to load or discharge cargoes.

Sri Lanka has recently become more competitive as the price differential between Colombo and Singapore has narrowed, which in turn has prompted a rise in the number of ships calling at Colombo for bunkers only.

Over the last six months, sales volumes off port limits have increased as a consequence of the more favourable prices being offered at Colombo.

Speaking to Lanka Business Online, Lanka IOC Managing Director Suresh Kumar said larger vessels were unable to come in to the port. The company is therefore aiming to raise bunker supply volumes by catering for the procurement needs of ships sailing past the island.

In January 2010, the company is said to have supplied 3,000 tonnes of fuel to a tanker. The parcel size was so large that the firm had to charter two barges to carry out the delivery off port limits.

According to port officials, the number of ships calling at Colombo for bunkers increased significantly last year to 120.

The increase in bunker volumes is a direct result of the liberalization of the Sri Lankan bunker market over a year ago after Lanka Marine Services (LMS), the bunkering unit of John Keells Holdings (JKH), was ordered to vacate the premises it had been using to store product for its bunkering operations in Colombo and hand the land over to the Sri Lanka Ports Authority (SLPA).

The decision followed a ruling by the Supreme Court that there had been 'serious irregularities' in the manner in which LMS had been privatized by John Keells Holdings Ltd.

As a result of the court ruling, JCT Ltd. Oil Bank, a fully owned subsidiary of the Sri Lanka Ports Authority (SLPA), took over control of the tank farm and entered into agreements with eight bunker licence holders for shared use of the storage facility. This in turn led to increased competition between local suppliers.

According to officials at the Sri Lanka Ports Authority (SLPA), approximately 30,000 tonnes of marine fuel can be stored at the tank farm at any one time.

Eighteen months ago, this amount would have catered for roughly two months of bunker demand in Colombo, which was at 15,000 tonnes per month.

However, according to recent estimates, total market volumes have now increased to around 30,000 tonnes a month.