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News  


 

High profile delegation to visit Iran to revive Sapugaskanda refinery expansion

By Santhush Fernando
A high-powered delegation is scheduled to visit Iran in the near future in a bid to revive the Rs. 244 billion Sapugaskanda refinery expansion project which has been in the limbo since 2007 and to appeal to Iranian authorities to extend repayment period up to twenty years.
“Petroleum Industries Ministry Secretary Titus Jayawardena and Ceylon Petroleum Corporation (CPC) Chairman Harry Jayawardena will leave for Iran in the very near future. The purpose of their visit is to request the Iranian government to extend the repayment period to twenty years,” a high-ranking Petroleum Industries Ministry official told The Nation.
Although the Sapugaskanda Refinery Expansion and Modernisation (SOREM) Project is very vital to safeguard energy security of the country, The Nation earlier exclusively reported how the staggering cost of the project estimated to be over US $2.2 bn or Rs. 244.2 bn would impact an economy such as ours.
“Although this is very vital for the country on the one hand it looks almost like a gamble as it costs a hefty $2.2bn in comparison to Sri Lanka’s GDP of $ 48bn. This might create an unpleasant situation for the whole economy if something goes wrong somewhere,” the official said.
“There is also great deal of uncertainty over the project. No one is quite sure what exactly will be done. Whether CPC would go for a brand new plant of US $ 2.2bn or whether we can manage with upgrading the existing plant no none knows. There are lots of areas which needed to be sorted out in the first place,” he added.
The most debatable factor has been the sheer cost of SOREM project itself. Last year, the Inter Ministerial Committee discussing the interim report on the feasibility study of the SOREM Project had indicated that the project cost, was not within the reach of the country’s economy adding therefore that the decision-makers needed to look for alternatives.
The cost of the project was indicated by United Kingdom-based KBC Advanced Technologies PLC, which conducted the feasibility study for CPC.
“If so, this would be the costliest project Sri Lanka would have ever undertaken. SOREM costs six times more than US $ 360mn Hambanthota Port or ten times more than US $ 210mn Mattthala International Airport,”
Last December, Ministry Secretary Titus Jayawardene requested the project steering committee to study ‘all cost reductions possible’ stating that it was possible to raise Sri Lanka’s 30 percent component of the project funding, which would be close to Rs 73bn,