Sapugaskanda refinery revamping to draw US $ 2bn in foreign investments
By Chandeepa Wettasinghe
The proposal to refurbish and double the capacity of Sri Lanka’s only refinery in Sapugaskanda will draw in US$ 2 billion in financing, the country’s petroleum minister said this week.
“The cost will come to about US$ 2 billion. The profit per year is going to be around US$ 400 million once the revamping is completed. There is no other business in Sri Lanka that generates that kind of profit, so getting investments for this type of project is not a difficult task,” Petroleum Resource Development Minister Chandima Weerakkody said.
Recent reports said that the Ceylon Petroleum Corporation (Ceypetco), under which the Sapugaskanda Refinery operates, has received 28 bids from companies from China, India, Iran, Italy, Singapore, the UAE and the US.
“We’re currently in the proposals (stage),” Weerakkody said.
He noted that the type of funding would be determined after a proposal is finalized by the Cabinet Committee on Economic Management.
The programme would see the capacity at the Sapugaksanda refinery double to 100,000 barrels per day, Weerakkody said.
The US$ 2 billion expansion plan has been on the cards since 2011. The then government had plans to market the project to entities in Russia and South Korea, after an initial deal with Iran to complete the project for US$ 1.7 billion fell through.
Meanwhile, Weerakkody said Ceypetco will be focusing on more jet fuel production in the future, while improving internal efficiencies and reducing wastage through IT assisted optimization.
“We are going to trim kerosene production because there’s an oversupply. We’re importing jet fuel, but we can produce better quality jet fuel here and make more profits. So we will produce more jet fuel and we will also increase the weight on lubricant production,” he said.
He also said that due to greater jet fuel consumption at the Katunayake Airport, the cabinet has given approval to construct a pipeline between the airport and new jet fuel tanks through the Muturajawela Marsh.
Meanwhile, talks are also ongoing with the Indian government for 100,000 barrels per day refinery in Trincomalee to be developed simultaneously with the joint venture for the Trincomalee oil tank farm.