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Friday July 1st, 2022

Sri Lanka to shut oil refinery as crude supply runs out

ECONOMYNEXT – Sri Lanka will close its state-run refinery from March 21 as crude supplies and is hoping to re-start operations by April if short term tenders which have been floated, gets a good response, an official said.

Sapugaskanada Refinery will be closed temporarily Monday onwards, but we will be reopening it as soon as possible.

“We have already called for short term tenders for April and we hope we will get a good response for those,” state-run Ceylon Petroleum Corporation Chairman Sumith Wijesinghe said in a recorded statement.

Meanwhile we have called for long term tenders and we have entered into agreements, and with those agreements from April onwards we will be able to have a continuous supply of crude oil.

The refinery can use only certain grades of light crude and has a low yield of light distillates. It is however an important source of furnace oil and naptha for the power sector.

Sri Lanka has been unable to unload shiploads of refined fuels as money printing triggered forex shortages creating fuel and gas queues.

“Usually a 90,000 metric tonne consignment of crude that we import costs abound 40 million US dollars,” Wijesinghe said.

But due to rise of fuel prices in the international market we have to pay around 60-70 million dollars per ship.”

Wijesinghe said the arrival of refined fuels from the Indian credit line will help ease shortage in the country.

The CPC has entered into a contract to get fuel on 160-day credit terms which will help, he said.

Meanwhile trade union officials claimed the crude on credit was due only in June. (Colombo/Mar19/2022 – Update II)

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