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Plan to sell Sapugaskanda Oil Refinery to a foreign investor risking over 650 jobs

By: Staff Writer

May 21, Colombo (LNW): The government’s plan to transform 54 year old Sapugaskanda Oil Refinery to a separate public -private enterprise pruning its staff to maximum possible manner as it is becoming inactive due to frequent shutdowns, Ceylon Petroleum Corporation sources divulged.

More than 650 employees at the Sapugaskanda Refinery, the country’s sole oil refinery, face potential job losses due to its transformation into a separate public enterprise.

According to sources, the government plans to retain only approximately 200 of the current employees for the new enterprise.

The remaining workers will be placed in a pool from which the new enterprise will select the ncessary personnel to maintain operations.

In March, the Cabinet of Ministers approved a proposal to operate the Sapugaskanda Oil Refinery as a state-owned business entity disjoined it from the Ceylon Petroleum Corporation (CPC).

The plan of the government  is to get rid of the country’s only oil refinery with a capacity to supply 100percent  of the country’s kerosene requirement, 50 percent of the aviation fuel requirement, and100 percent  of the naphtha requirement.,

It was used to produce 30 percent of the diesel requirement, 14percent of the petrol requirement, 7-8percent of the gas requirement, and 75-100percent of the furnace oil requirement.

Initially designed to process 38,000 barrels of crude oil, the refinery currently has a capacity of refining about 50,000 barrels per day.

Sapugaskanda Refinery was built by Iran under the guidance of the Ceylon Petroleum Corporation (CPC) in August, 1969.

A senior engineer of the CPC said that the closure of the Sapugaskanda Oil Refinery would cost the country an additional sum of US$ 1.1 million a day to meet its crude oil requirement.

He further claimed “The refinery has been shut down on several occasions and it has cost a lot of money to resume its operations. This was a national crime, he added.

The Cabinet of Ministers recently approved a proposal to operate the Sapugaskanda Oil Refinery as a state-owned business entity disjoined from the Ceylon Petroleum Corporation (CPC).

The government had said it has identified the need to make a ‘critical investment’ to upgrade the oil refinery in order to keep it up and running for another 25 years.

Thereby, it has been decided that the Sapugaskanda Oil Refinery be operated as a separate public enterprise and to call Expressions of Interest (EOIs) to select a suitable strategic investment partner to upgrade the infrastructure facilities to address the existing operational challenges.

The Power and Energy Minister had said the government is also exploring the option of relocating the Sapugaskanda Oil Refinery to Trincomalee in the future with upgraded modern facilities and the development of the Tank Farm.

The facility, which is the only oil refinery in Sri Lanka, was established in 1969 and fulfils approximately 25% of the country’s demand for refined petroleum products.

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