STO aims to stop foreign vessels from selling oil in Maldives

The State Trading Organisation (STO) is making strides to develop offshore bunkering services while addressing challenges posed by unauthorised foreign vessels operating in Maldivian waters.

Managing Director Shimad Ibrahim recently outlined efforts to tighten regulations and enhance STO's bunkering operations to protect domestic businesses and ensure high-quality services.

STO, in collaboration with Maldives Ports Limited (MPL), launched offshore bunkering services in September last year in the Ihavandhippolhu region, particularly near Ha. Hoarafushi. The initiative is aimed at providing marine gas oil (diesel) for luxury yachts and ships, as well as very low sulphur fuel oil for larger cargo ships. The services also include pilotage and other maritime support offered by MPL.

Currently, the operations utilize two vessels:

Shimad highlighted significant interest in these services, which positions the Maldives as a potential hub for the global shipping industry. However, he noted that the reliance on offshore vessels limits STO's ability to meet growing demand effectively.

A pressing concern for STO is the unregulated activities of foreign vessels providing bunkering services within Maldivian waters. Shimad expressed that foreign ships are taking advantage of legal loopholes to operate without permission, selling oil and departing without regulatory oversight. This undermines the efforts of local businesses like STO and MPL.

“The biggest challenge with bunkering is that, under the guise of ship-to-ship transfers, foreign vessels are bunkering here without permission. They sell the oil and leave because they can stay in Maldives for a free period of time. This loophole must be closed through stricter laws and regulations,” Shimad stated.

He further warned about the risks of low-quality fuel brought in by these vessels, which could harm the reputation of Maldivian bunkering services. 

“Very high sulfur level oil is being sold by such ships because it is cheaper. We are committed to providing very low sulfur fuel, but there’s no mechanism to regulate this,” he explained.

Shimad revealed ongoing discussions with the Customs Authority, the Economic Ministry, and the Transport Authority to address these regulatory gaps. His goal is to establish stricter laws to prevent unauthorized bunkering activities and to ensure that only high-quality oil is supplied in Maldivian waters.

To meet the increasing demand and address logistical challenges, STO is investing in infrastructure development. Shimad announced plans to build a storage facility and a port capable of accommodating large vessels. This project, designed as an integrated development initiative, aims to provide comprehensive services for visiting ships, including facilities for crew disembarkation.

A framework agreement has already been signed with a globally renowned fund to finance the project. 

“We have a formal agreement to proceed within six months, and we are working to expedite the process,” Shimad said. 

The project is currently in the design and feasibility stage, with contract awards expected soon.

Shimad expressed confidence in the potential of the offshore bunkering industry to become a major revenue stream for the Maldives, given its strategic location. 

“Every investment has a life cycle. We are in the introduction stage now. Once developed and matured, this industry can significantly contribute to the Maldivian economy,” he remarked.