Supplier’s expert barred from investigation

The Sri Lanka authorities have not permitted an expert described as ``internationally renowned’’ sent here by Vitol, the supplier of a suspect consignment of diesel to the Ceylon Petroleum Corporation, to participate in the investigation into the contaminated fuel issue, Vitol said in a public notice yesterday.

It said that the expert, Dr. Clifford Bennet of Minton, Treharne & Davies (S) Pte. Ltd. has been sent here ``to assist in establishing the cause of the contamination, its source and, most importantly, how to avoid such incidents recurring.’’

``Dr. Bennet is currently in Sri Lanka but, regrettably, has not been given the opportunity to participate in the investigation,’’ Vitol’s notice said.

The supplier ``strongly’’ refuted the allegation that the diesel it supplied caused the reported incidents as well as various allegations made about its reinstatement as a registered supplier of CPC following its suspension in 2009.

``CPC is a longstanding and greatly valued customer of the Vitol Group and the Vitol Group has gone to great lengths to support CPC. This support has included providing extended credit terms when all CPC’s other suppliers refused to do so and assisting CPC with emergency product supplies,’’ the notice said.

Vitol said it looked forward to the prompt resolution of the present situation and expressed confidence that the group will be fully exonerated.

(See Business Page VIII for the full text of the public notice)
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The Vitol Group of Companies strongly refutes the allegation that diesel it supplied caused the reported incidents of damage to vehicles and machinery. The Vitol Group of Companies further denies the various allegations that have been made about its reinstatement as a registered supplier to the Ceylon Petroleum Corporation’s (CPC) following its suspension in 2009.

The Diesel Supplied

on 22 July 2012

The diesel supplied by Vitol came from a larger parcel of product which has been supplied to a number of Vitol’s customers in the region, where it has been consumed without incident and found to be fully on specification.

The cargo in question was tested to international standards by the CPC’s own inspectors before it was approved for discharge by CPC itself.

Maj. Gen. de Zoysa (retd.), Chairman of Ceylon Petroleum Storage Terminals Limited (CPSTL), has on 6th August 2012 categorically stated that the product supplied by Vitol were repeatedly tested and found to be compliant with the contractual specifications.

CPC has not yet established the source and nature of the contaminant, but it is clear that contamination could have occurred at any of a number of points between the terminal and the end consumers. The Vitol cargo was mixed with diesel from one of CPC’s other suppliers, immediately after discharge before passing into the downstream supply chain over which Vitol has no control.

Vitol has arranged the attendance of the internationally renowned expert Dr. Clifford Bennett of M/s Minton, Treharne & Davies (S) Pte. Ltd., to assist in establishing the cause of the contamination, its source and, most importantly, how to avoid such incidents recurring.

Dr. Bennett is currently in Sri Lanka but, regrettably, has not been given the opportunity to participate in the investigation.

To date there is not a single piece of evidence linking the Vitol cargo to the machinery damage. CPC has not advised or invited Vitol to participate in any retesting of the retained cargo samples. CPC has not advised Vitol of any other sampling and testing further down the domestic Sri Lankan logistical supply chain to try to establish the source and nature of the contamination.



The Reinstatement of Vitol as a Registered

Supplier to CPC

There have been a number of statements in the press suggesting Vitol supplied Fuel Oil contaminated with waste lubricants. Such an allegation is false and is vigorously denied. There was a dispute as to the quality of Fuel Oil supplied in 2009 that resulted in CPC suspending Vitol from its list of registered suppliers.

The cargo in question was tested to international standards by the CPC’s own inspectors before it was approved for discharge by CPC itself. CPC never pursued a claim for against Vitol for breach of contract despite Vitol being suspended for two years. CPC did not provide Vitol with any test results after the cargo had been discharged nor did it request Vitol to participate in any retesting of the retained cargo samples.

In 2011 a settlement of the dispute was negotiated with Vitol making a goodwill payment of US$ 150,000 to CPC. The suggestion that this was a fine or penalty is incorrect.

The settlement was reached with CPC with the approval by the Chairman of CPC and the Minister of Petroleum Industries.

Since the lifting of Vitol’s suspension Vitol has won twenty-two tenders by offering the most competitive prices in the market.

CPC is a longstanding and greatly valued customer of the Vitol Group and the Vitol Group has gone to great lengths to support CPC. This support has included by providing extended credit terms when all CPC’s other suppliers refused to do so and assisting CPC with emergency product supplies.

The Vitol Group looks forward to the prompt resolution of the present situation and remains confident that it will be fully exonerated.
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