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| Sunday, 4 December 2005 |
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Features |  |
| News Business Features Editorial
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Refinery bursting at its seams by Anura Maitipe Oil is the blood of the economy of any country, and it is quite clear that the new government has paid attention to increasing the refining capacity of Sapugaskanda Oil Refinery which was commissioned in 1967. At that time the refining capacity was more than sufficient to meet the total country requirement of refined oil.
But, now it could cater to only 60 percent of the total oil requirement. It appears that for the last 37 years no government has taken any initiative to increase the capacity of the Oil Plant. With the open economy several new industries have come up and as a result, electricity demand had also gone up. To cope with the requirement the government then in power installed two diesel-powered thermal plants at Kelaniya and Sapugaskanda. In the meantime a huge fleet of vehicles were imported into the country, but the refining capacity remained the same. The total annual oil requirement in 1967 stood at 1.2 million metric tonnes but now it has increased to 3.3 million metric tonnes. The maximum refining capacity of Sapugaskanda Refinery is 50,000 barrels per day and in other words it could produce only 60 per cent of the total requirement. It should not be forgotten that Sapugaskanda Refinery as well as the Hunupitiya Fertilizer plant were well planned twin projects in this country. The petroleum by-product of Sapugaskanda were made use of in the Hunupitiya fertilizer plant, to manufacture urea to meet the agricultural needs of the country. The State Fertilizer Manufacturing Corporation was an outright donation from the former Soviet Union on a request made by the late Prime Minister Sirimavo Bandaranaike. The main objective was to make full use of petroleum by-product for the benefit of the farming community. With the establishment of a Urea Plant at Hunupitiya along with the oil refinery at Sapugaskanda, brought Sri Lanka into self sufficiency in fertilizer and refined oil. In 1982 the annual production of urea at the Hunupitiya factory was 310,000 tonnes when the country's need was only 290,000 tonnes. While providing fertilizer for farmers at a reasonable price, the excess production of 20,000 tonnes of urea was exported. In 1982 the annual savings of State Fertilizer Corporation stood at Rs. 750 million. In addition to this it had provided direct employment opportunities for 1250 workers in different fields and the closure of Sapugaskanda Urea plant in January 1987 was the main reason for the constant price hike in fertilizer. However in the late 1970's the Petroleum Corporation had made a request with a project proposal from the then government to increase the refining capacity at the Sapugaskanda Refinery. The Chinese government had conducted a feasibility study of this project and later they had agreed to provide financial assistance to the tune of USD 400 million to increase the capacity, but was turned down by pointing out petty reasons. |
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