Govt. renews efforts to expand refinery capacity

• Cabinet nod to give teeth to CPC Act to allow new 100,000 b/d refinery 
• Feasibility study on proposed refinery to be completed by Oct.
• Govt. intends to call for international bids by year-end

Cabinet this week approved amendments to the Ceylon Petroleum Corporation (CPC) Act No. 28 of 1961, renewing its efforts to expand refinery capacity and boost efforts to build new refinery in the coming years.

The amendments to the existing Act are hoped to give teeth to the upcoming Bill, which will allow the implementation of a build, operate and transfer (BOT) basis refinery with an output of 100,000 barrels per day (b/d).

“To increase our current output of 38,000 b/d to 45,000 b/d, and to build a new refinery with a capacity of 100,000 b/d, we needed to revise certain provisions of the existing CPC Act,” Co-Cabinet Spokesman Gammanpila told journalists at the weekly Cabinet media briefing yesterday.

He said that with CPC holding a monopoly in the refinery industry, and for the proposed new refinery to be built on a BOT basis, amendments to the existing legislation were critical.

Currently, the Sapugaskanda refinery – the larger of the country’s two refining sites – meets only 25% of local demand for refined petroleum products, requiring the remaining 75% be imported.

Cabinet approved the proposal by the Power Minister to revise the said Act, including the amendments recognised in relation to it, and instructed the legal draftsmen to prepare a draft Bill in this regard.

The Minister also said the feasibility study on the proposed new refinery is already underway which will be completed by October.

On 2 November 2020, Cabinet approved a proposal for CPC to initiate a new feasibility study to determine the scope, technical, operational, and financial feasibility of the planned 100,000 b/d expansion, with a focus on several alternative proposals to enhance the refinery’s existing capacity. 

Approval for the new feasibility study follows a previous study conducted in 2010 for the refinery’s renovation and expansion. Subsequent technological changes in the sector, however, have made it impossible to proceed on results of the earlier 2010 feasibility study.

“The proposed refinery will be the single largest project in Sri Lanka with an estimated investment of Rs. 600 billion,” he added.

Gammanpila also said the Government intends to call for international bids for the proposed refinery by the end of the year to select an investor on BOT basis.