COLOMBO: Sri Lanka is exploring possibilities of private investment in oil refining and has invited several foreign companies, including Indian companies like Reliance, to come up with proposals, the Minister for Petroleum, Chandima Weerakkody, told the Foreign Correspondents’ Association here on Monday.
He said that he will be visiting India soon to meet his Indian counterpart. Officials told Express that the visit could take place either in October of November.
Weerakkody said that Sri Lanka is looking to get investments to the tune of US 4 billion in the petroleum sector to meet domestic demand and also exploit export potential, keeping in view the strategic location of the island nation.
According to Sri Lanka’s Central Bank, the country imported US$ 2.7 billion worth of petroleum and petroleum products in 2015. Fuel imports accounted for 14.3 percent of the import bill. In 2014, when word prices were significantly higher, the fuel component of the country’s import bill was as high as 23.7 percent.
Sri Lanka’ only refinery at Sapugaskanda, is 47 years old, and is facing problems. According to the website of the Ministry of Petroleum, the refinery has been undergoing immense production constrains and technical difficulties due to non-availability of Iranian Light crude which is best suited for use in the refinery in terms of the yield and refinery margin obtained from the refining process.
As a result of ongoing US sanctions against Iran, there was an attempt to shift to Oman Export Blend, Murban, and Arabian Light. But the use of these resulted in a substantial reduction in the refinery margin, impacting adversely on the profitability of locally refined products. Sanctions against Iran have also led to the closure of the refinery on several occasions.
It is in this context that Minister Weerakkody is seeking foreign partners to set up a refinery or improve matters at the existing one, to enhance domestic refining capacity.
