Sapugaskanda project cost soars close to quarter trllion rupees

Sapugaskanda project cost soars to Rs 249bn
By Santhush Fernando
The Inter Ministerial Committee discussing the interim report on the feasibility study of the Sapugaskanda Refinery Expansion and Modernisation (SOREM) Project has indicated that the project cost, which soared close to nearly a quarter trillion rupees or Rs. 248.6bn, was not within the reach of the country’s economy and therefore needed to look for alternatives.
United Kingdom-based KBC Advanced Technologies PLC, which is conducting the feasibility study for Ceylon Petroleum Corporation (CPC), handed over the interim report to Ministry of Petroleum Resources and Petroleum Resources Development, early September, a high ranking Ministry official told The Nation.
The final reports are to be submitted by November 2010.
“During the meeting it was brought to the notice of the Treasury that this project is nearly impossible without the intervention of highest levels of the government,” said a Ministry official.
“If the reports are right, this would be the costliest project Sri Lanka would ever undertake. (See graph) However, the status of the project is still uncertain. The cost indicated previously was US $ 2bn (Rs. 222bn) but recent-most projection was to the tune of $.2.2bn (Rs.244.2bn) which is an increase of ten percent. Everything is still undecided and it is still very difficult to comment on what exact course will be taken,” he added.
“That’s why we say there needs to be a national level approach on this, as it is not possible for CPC to handle this on its own,” the official added.
During this week’s meeting ministry officials had intimated that they were still exploring possibilities of obtaining Iranian funding, although the process came to a virtual standstill during the recent past.
“It was informed that the government was trying to raise its component of 30 percent funding through a new agency. They were also open for private sector funding, we were told.”
He said Sri Lanka was open for alternative fuels like Liquefied Natural Gas (LNG).
“A high-level committee comprising of representatives of the Treasury, Ministries of Petroleum Resources and Petroleum Resources Development and Power and Energy, Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB), and West Coast Power (Pvt) Ltd, was set up with the task of exploring the commercial viability of LNG,” he added.

Last May, KBC Advanced Technology handed over two vital documents – the Market Overview and Refinery Configuration reports on the project and had recommended that the 40-year-old refinery plant be given a 100 percent upgrade, bringing it up to regional standards based on the forecast of petroleum demand for 2011 and beyond.

(http://www.nation.lk/2010/09/19/news5.htm)