The State Trading Organization (STO) has announced its intention to reclaim the Maagiri lagoon near Kaafu Atoll Thilafushi to increase its oil storage capacity. The project is expected to commence within the next 18 months, according to STO Managing Director Shimad Ibrahim.
In an interview with local media, Mr Shimad highlighted the importance of the oil business to STO’s revenue, as well as the challenges posed by insufficient storage space at the current Funadhoo facility. Limited capacity prevents the company from importing larger oil shipments, hindering efficiency and potentially driving up costs.
“For example, a vessel of 50,000 tons or 80,000 tons cannot be imported. Especially because Funadhoo is small,” Mr Shimad explained.
The administration’s plans also include relocating the Funadhoo oil storage and developing the island into a financial centre.
While acknowledging the time required for the Maagiri lagoon reclamation, Mr Shimad expressed confidence in finding a solution to STO’s oil storage issues. He added that the new location would feature a high-standard terminal built with the assistance of industry specialists.
“Increasing capacity is very important for the business. Overall cost will be significantly reduced,” Mr Shimad stated.
STO currently has 50,000 tons of diesel and 10,000 tons of petrol stored at Funadhoo. The majority of oil imported by the company is utilised for electricity generation.
In 2022, STO reported a revenue of MVR 13.4 billion (approx. USD 867 million). While the oil business generates a significant proportion of this income, Mr Ibrahim noted that profit margins are relatively low due to the substantial amount of oil used in electricity services.
