Sri Lanka's Cabinet of Ministers has given the green light for the construction of three new fuel storage tanks at the Muthurajawela terminal, marking a significant expansion of the country's petroleum storage capacity.
The Approval
At its meeting on 2 June 2025, the Cabinet approved plans to build two fuel storage tanks with a capacity of 15,000 cubic metres each, along with a third tank of 10,000 cubic metres, at the Muthurajawela terminal. The project will be funded by Ceylon Petroleum Storage Terminals Limited.
Environmental and Legal Safeguards
Recognizing the environmental sensitivity of the project, the Cabinet, at a subsequent meeting on 20 July 2026, directed the Minister of Energy and the Minister of Environment to work out the methodologies needed to satisfy environmental, legal, and other regulatory requirements — in consultation with relevant stakeholders — before the project moves forward.
In response, both ministers confirmed to the Cabinet that the project will be carried out in full compliance with the Fauna and Flora Protection Ordinance. Furthermore, all recommendations and conditions set out by the Central Environmental Authority have been incorporated into the procurement's contract agreement.
Contract Awarded Through Competitive Bidding
Following this assurance, the Cabinet approved a resolution submitted by the Minister of Energy to award the construction contract to a joint venture between M/s Indo-East Engineering and Construction (Lanka) (Private) Limited and Ceylex Engineering (Private) Limited.
This joint venture was selected as the minimum substantially responsive bidder through an International Competitive Bidding process, on the recommendation of the Higher-Level Procurement Committee. The contract value stands at:
- US$ 3.04 million (excluding VAT), and
- Rs. 2,796.14 million (excluding VAT)
Looking Ahead
This project represents a strategic investment in Sri Lanka's fuel storage infrastructure, aimed at strengthening national energy security while ensuring the venture proceeds in step with established environmental protections.
Source: Cabinet Decisions 10/08/2026
https://www.dgi.gov.lk/images/2026/08/Cabinet_Decision_on_10.08.2026_English.pdf
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