Latest petroleum sector liberalisation set to break CPC monopoly
Sri Lanka is to liberalise the fuel refining, selling and distributing petroleum products in Sri Lanka amending the Ceylon Petroleum Corporation (CPC) Act No 28 of 1961 by revising it for the second time after 2002, the Ministry of Energy announced.
This amendment will provide provisions to allow an investor to enter into the oil refining business with the investment of US$ 3 billion in the new project taking over the monopoly enjoyed by the CPC, Minister Udaya Gammanpila said.
According to the present Act, the CPC has the sole authority in maintaining an oil refinery and this will end with the new amendment, he said adding that it will pave the way for other players to carry out the fuel importation and distribution as well.
However a Finance Ministry official pointed out that the selected investor will have to sell the refined fuel only to the CPC under the buy-back agreement.
The government will also be able to save $300 million per annum as local refining costs; he said adding that this will be a Built Operate and Transfer (BOT) project.
According to the feasibility study report, the present capacity of Sapugakanda refinery will be increased to 45,000 barrels from 38,000 per day while a new refinery will be built with a capacity of 100,000 barrels at Sapugaskanda.
The Government is also calling bids to select potential investors to build another refinery in Hambantota at an estimated cost of around $2.5 billion.
Another aspect of the amendment of this Act is to extend the time period of the 20-year license given to Lanka IOC to operate in Sri Lanka in 2003 which will expire in 2023.
The proposed new amendment will also vest the power in the subject minister to hand over Trincomalee oil tank farm to a new investor or to extend the current agreement with Lanka IOC, the official added.
An Energy Ministry official said the Trincomalee Oil tank farm would be managed under a company to be formed with LIOC with a majority stake for the CPC.
He said there are 99 tanks used during World War II with a capacity to store 10,000 tonnes of fuel in each.