The Sri Lankan government has rejected an offer from the Indian Oil Corporation (IOC) to upgrade the facilities at the Sapugaskanda oil refinery.
Petroleum Resources Minister Susil Premjayantha said that the government will require USD 400 million to upgrade the Sapugaskanda refinery and USD 1.5 billion to build a new one. IOC had expressed interest in the government’s plans to refurbish the island’s only refinery that will cost USD 2 billion.
“We have expressed our interest,” Suresh Kumar the IOC’s Colombo chief had told the Indian media.
He said that Lankan IOC have had several rounds of correspondence with the government’s petroleum officials.
“It is premature to discuss details of our discussions,” Kumar said without elaborating further. Sri Lanka has said that USD 2 billion would be needed to modernise the refinery at Sapugaskanda, a north Colombo suburb.
The refinery, built in 1960s was able to handle only Iranian and Saudi light crude. The 50,000 barrels per day refinery needs modification and Sri Lanka was talking to Iran in this regard in 2008.
Sri Lanka said that it was seeking alternative crude oil suppliers in view of the US sanctions on Iran coming into force around June this year.
Over 90 per cent of Sri Lanka’s crude oil requirements come from Iran.
Sapugaskanda needs modifications to handle supplies from non-Iranian sources, officials said.