Govt explores the option of relocating Sapugaskanda Oil Refinery in Trincomalee.
By: Staff Writer
March 20, Colombo (LNW): Sri Lanka is now exploring the possibility of relocating Ceylon Petroleum Corporation’s oil refinery to Trincomalee in the wake of the decsion to operate it as a public enterprise independent of the Corporation (CPC)., Energy Minister Kanchana Wijesekera said.
The cabinet of ministers this week approved a proposal to spin off the refinery as a separate company to raise capital from local and foreign investors to modernize the 1969 structure.
“It was also decided to explore the option of relocating the Sapugaskanda Oil Refinery to Trincomalee in the future…,” Minister Wijesekera said in an x.com (twitter) message.
The move is considered in the light of the development of a tank farm in Trincomalee, he said adding that the Sapugaskanda oil refinery will be upgraded with modern facilities along with the expansion of the Tank Farm.
The move comes following Minister Wijesekera›s revelation last month that discussions were held with the Indian Oil Company (IOC) regarding a proposed multi-product oil pipeline connecting Nagapattnam, Trincomalee Tank Farm and Colombo
Earlier this year, the Cabinet approved the initiation of the procurement process to select a prospective investor for the proposed development plan’s phase one in the Upper Tank area of China Harbour, Trincomalee and to lease 61 tanks of 99 fuel container tanks of the Upper Tank area to Trincomalee Terminal Ltd., for a period of 50 years.
The feasibility study aimed at developing the 61 oil tanks recommends a comprehensive 16-year plan divided into seven phases.
Under the first phase, the focus is on renovating nine productive tanks, laying a pipeline spanning around 1.75 kilometres and constructing essential supporting facilities. The project will be developed as a Build, Operate and Transfer (BOT) basis.
The Sapugaskanda Oil Refinery is the sole facility of its kind in the country, built with assistance from Iran in 1969. Despite several attempts by successive Governments to expand it, all were sidelined due to high costs involved. In 2010, a feasibility study said it would cost an estimated $ 2 billion to upgrade and expand the facility.
The refinery in its current capacity only meets 25% of the local demand for refined petroleum products with the remainder largely imported. It supplies oil to the CPC.
By transforming the refinery into a separate public enterprise, the aim is to facilitate essential investments from both domestic and foreign private sectors.
The strategic move also reflects a broader trend of the Government in restructuring and modernising State-owned enterprises (SOEs) to overcome the financial burden of those on economic growth and efficiency.
