New feasibility study on expanding Sapugaskanda Oil Refinery

• Power Ministry given Cabinet approval to embark on effort to expand capacity from 40,000 to 100,000 barrels 

Cabinet yesterday gave approval for the Power and Energy Ministry to conduct a feasibility study on expanding the Sapugaskanda oil refinery so that it could increase its capacity by over twofold.

The Cabinet paper was presented by Power Minister Dallas Allahapperuma who proposed that a new feasibility study should be conducted as a previous study done in 2010 was now outdated. 

The aim of the Government is to expand the capacity of the Sapugaskanda Oil Refinery from processing 40,000 barrels of crude oil to 100,000. The refinery, which is one of two in the country, supplies oil to the Ceylon Petroleum Corporation (CPC). 

However, the refinery in its current capacity only meets 25% of the local demand for refined petroleum products with the remainder largely exported. The Government hopes that by increased local capacity it can save on imports of refined oil.  

Accordingly the Cabinet of Ministers approved the proposal presented by the Minister of Power to initiate a new feasibility study to determine the scope, technical, operational and financial feasibility of the project. 

The Sapugaskanda Oil Refinery was built with assistance from Iran and even though there have been a number of attempts by successive governments to expand it, all were sidelined due to high costs involved. The 2010 feasibility study said it would cost an estimated $ 2 billion to upgrade and expand the facility.