Sri Lanka’s long-delayed efforts to expand and modernise the Sapugaskanda Oil Refinery have gathered new momentum, with the government confirming that 20 investors have responded to the call for Expressions of Interest (EOIs) to establish a 100,000-barrel-per-day refinery under a Build-Operate-Transfer (BOT) model.
Energy Minister Kumara Jayakody told Parliament that the EOI evaluation process is now in its final stages, marking what officials describe as the most progress achieved on this project in nearly two decades.
The revival of the project comes against the backdrop of repeated failures by successive governments to move forward with refinery expansion due to strong political and trade union resistance most prominently led by the Janatha Vimukthi Peramuna (JVP), whose petroleum-sector union consistently mobilised protests and strikes whenever the state sought private or foreign investment for Sapugaskanda.
Ironically, the same political movement now leads the National People’s Power (NPP) government, which is actively courting investors for the very project it once helped delay.
Past administrations, including those of Mahinda Rajapaksa, Maithripala Sirisena, and Gotabaya Rajapaksa, all made attempts to initiate refinery modernisation.
Each effort was met with large-scale demonstrations organised by the Ceylon Petroleum Corporation (CPC) workers’ union affiliated to the JVP.
These campaigns framed foreign involvement in the refinery as a threat to national assets and petroleum-sector jobs, with union leaders staging pickets outside the refinery, blocking critical operations, and warning of “privatisation by stealth.”
As a result, multiple feasibility studies, negotiations with Middle Eastern investors, and preliminary procurement processes were abandoned halfway.
Today, the political landscape has shifted. Minister Jayakody told Parliament that Requests for Proposals (RFPs) would soon be issued under the government procurement framework, describing the refinery upgrade as “a national priority that cannot be postponed any further.”
Officials say the government views Sapugaskanda modernisation as essential to reducing the country’s heavy dependence on imported refined petroleum, which drains billions of dollars annually.
According to ministry data, about Rs. 785 million has been allocated for land acquisition required for the expansion of the Sapugaskanda complex, with Rs. 510 million already disbursed as advance payments.
In 2022, the state spent US$600,000 approximately Rs. 137 million on a feasibility study that confirmed the economic viability of a modern, higher-capacity refinery. That study, officials say, had been left idle until the new administration revived the initiative.
The proposed refinery is expected not only to meet the domestic requirements of the Ceylon Petroleum Corporation but also support bunker fuel supply and petroleum exports, positioning Sri Lanka as a regional energy hub.
While the NPP government is now accelerating a project it once fiercely opposed, senior CPC officials note that the current economic climate leaves little room for ideological resistance. “The country needs refining capacity protests will not solve our fuel bill,” one official said on condition of anonymity.
For the first time in years, political will appears aligned with economic necessity. Whether this alignment will finally push the Sapugaskanda upgrade into realitor trigger fresh cycles of resistance remains to be seen.
