The Czech Republic has committed itself to a massive US$2.2 billion by way of a project loan for the modernisation of the technological facilities at the Sapugaskanda Oil Refinery, Daily Mirror learns.
However, negotiations are underway to use only US$592 million of the loan to renovate the existing facility and restore its original production capacity. The oil refinery was commissioned in August 1969 to process Iranian light crude oil. Initially, the government signed an agreement with Iran to modernize and expand the facility. Yet, it was terminated due to the inability to process the project loan after the United States imposed an embargo on Iran early last year.
According to initial negotiations between the Petroleum Ministry and the Czech Republic, it was found that the lifespan of most of the equipment at the refinery had almost expired and some of the items are beyond economic repair at the moment. Therefore, the refinery can only produce 30,000 to 35,000 barrels of oil a day while the original capacity was 50,000 barrels a day.
A team of specialists visited Sri Lanka to discuss the project proposals in December last, year. Sources close to the Petroleum Ministry told Daily Mirror that the project loan of US$2.2 billion was was intended to modernise the refinery and double its the capacity to 100,000 barrels a day.
However, ministry sources said the government would not go obtain the entire loan at once as it would increase the country’s debt burden. Also, it seeks to enable the refinery to process a new type of crude oil, in addition to Iranian light crude.
Earlier, the countries such as Vietnam, China, India and the US showed interest in investing in this project.
Czech Petroleum Corporation representatives will visit Sri Lanka next week to work out the project proposals. (KB)
