Sri Lanka has to soon finalise how it will modernise its only crude oil refinery, Sapugaskanda, but no decision has been taken on how this is to be achieved, the island nation's Petroleum Minister Susil Premjayantha has said.

“We have had no discussions with the LIOC [Lanka Indian Oil Corporation] on this [refurbishing],” he told The Hindu over phone, when asked about a Xinhua-ANI story quoting him as saying that Sri Lanka had rejected an Indian offer to upgrade its refinery. “When we have not had any discussion, where does the question of rejecting arise,” he said, and added that he had read in The Hindu the LIOC's views on supporting the Sapugaskanda refinery.

Many delegations

Asked how the misunderstanding arose, he said it was a fact that many delegations had visited Sapugaskanda. “IOC wanted to visit. They had come to my office too… Many have visited earlier, including the Chinese,” he said and asserted that no policy decision on how the upgradation should be carried out had been taken. Sri Lanka was considering various options, and was in a position to finance — with loans from banks — the upgradation, he asserted.

Sapugaskanda, set up with Iran's help, can refine Iranian crude efficiently. Sri Lanka signed a Memorandum of Understanding with Iran in 2007 to refurbish the refinery, which can handle about 2 million tonnes annually. But discussions meandered, mainly over financial issues. The Czechs stepped in and even offered a commercial contract to Sri Lanka for loans in July last year. Again, the problem appears to be the amount that Sri Lanka needs to raise as its share.

IOC team report not yet

An Indian Oil Corporation (IOC) technical team visited the refinery in March. It is reliably learnt that the team is yet to submit its report to IOC. After the visit was leaked selectively, political parties opposed to India — such as the Janata Vimukti Peramuna — were up in arms against taking Indian help to refurbish the refinery.