October 04, Colombo (LNW): A wave of international interest has emerged around Sri Lanka’s plans to upgrade and expand its only oil refinery, with twenty foreign firms—from countries including China, the United States, Japan, and the United Arab Emirates—submitting proposals to participate in the project.
The Expressions of Interest (EOIs), called by the Ceylon Petroleum Corporation (CEYPETCO), were formally closed last Friday.
Speaking to Daily Mirror, CEYPETCO Chairman D.A. Rajakaruna, the response signals renewed confidence in Sri Lanka’s energy sector, which has long struggled to attract large-scale investment due to a range of historical challenges.
Rajakaruna confirmed that the proposals are now being prepared for evaluation, with the emphasis on securing long-term strategic partnerships rather than short-term capital inflows.
The government is seeking proposals that offer more than financial backing—prioritising investment models that enhance operational efficiency, open up new markets, and create lasting value for the country.
The Sapugaskanda oil refinery, located just outside Colombo, has served as a cornerstone of Sri Lanka’s energy infrastructure since the 1960s. Despite its strategic importance, plans to modernise and expand the facility have repeatedly stalled over the past decade due to internal conflict, the COVID-19 pandemic, economic instability, and political turbulence.
Feasibility assessments were previously undertaken in both 2010 and 2022, but neither effort progressed to implementation.
However, officials now argue that conditions are finally conducive to moving forward. With growing demand for refined petroleum products in the South Asian region and relative political stability returning to the island, the CEYPETCO sees this moment as a crucial window for transformation.
The proposed expansion would double the refinery’s current capacity—from 50,000 barrels per day to 100,000—allowing Sri Lanka not only to better meet domestic demand but also to explore regional supply opportunities in sectors such as aviation fuel, marine bunkering, lubricants, and petrochemicals.
This would significantly reduce dependency on costly imports while positioning the island as a competitive player in regional energy trade.
The government intends to retain a substantial ownership share in any partnership arrangement, ensuring that national interests remain safeguarded. However, it is also open to creative joint venture models that offer investors viable returns and strategic advantages, particularly in technology, logistics, and market access.
The CEYPETCO is now preparing for the next stage of the process, which will involve a detailed assessment of the submitted proposals and the selection of candidates for negotiation. The evaluation is expected to prioritise partners who demonstrate a commitment to sustainability, innovation, and capacity-building within Sri Lanka’s energy sector.
If successful, the project could become a flagship initiative for the country’s broader industrial renewal, sending a strong signal to international investors that Sri Lanka is ready to re-engage with the global market on ambitious, forward-looking terms.
