The Lanka Indian Oil Corporation has stepped in to offer support to Sri Lanka at a critical juncture. Its only refinery, Sapugaskanda, can only process Iranian crude efficiently. With U.S. sanctions looming, the refinery needs to be urgently revamped to function with better efficiency.
The Lanka IOC, a wholly-owned subsidiary of Indian Oil Corporation, which has a one-third market share in retail trade in Sri Lanka, has offered to help in the $2 billion upgrade of the refinery. Earlier attempts at modernisation of technological facilities with the help of other countries have not worked: the investments were huge, and only part of it was available as loan from those interested in refurbishing the refinery.
“We have offered them our expertise,” said Lanka IOC Managing Director Suresh Kumar when asked if IOC was interested in helping out Sri Lanka. A technical team from IOC had visited the facility and, this had made political parties such as the JVP, protest the idea that Indian help would be sought for the project.
Sri Lanka consumes about 5 million tonnes of petroleum products annually. Only about 2 million tonnes is refined in Sapugaskanda. The remaining is imported as petrol, and diesel, leading to a huge drain in foreign exchange.