Over 650 employees at the Sapugaskanda Refinery, the country’s sole oil refinery, are at risk of losing their jobs due to its transformation into a State-Owned Enterprise (SOE), The Sunday Morning learns.
Reliable sources indicate that the Government plans to recruit only about 200 of the current employees for the new SOE.
The remaining workers will be placed in a pool from which the new SOE will select the necessary personnel to maintain operations, it is learnt.
The proposal to operate the Sapugaskanda Oil Refinery as a public enterprise, separate from the Ceylon Petroleum Corporation (CPC), has been approved by the Cabinet of Ministers.
This decision was made during the Cabinet meeting held in March, following a submission by Power and Energy Minister Kanchana Wijesekera.
According to a statement from the Government Information Department outlining the weekly Cabinet decisions, the move is driven by the need for a “critical investment” to modernise and upgrade the refinery’s ageing infrastructure.
The goal is to ensure the refinery’s operational efficiency and viability for at least another 25 years.
In a separate announcement on X, Minister Wijesekera revealed that Expressions of Interest (EOIs) would be called for to find a suitable investment partner to enhance the infrastructure and address current operational challenges.
Furthermore, the Minister revealed plans to explore the relocation of the Sapugaskanda Oil Refinery to Trincomalee, which will involve the establishment of upgraded, modern facilities and the expansion of the Oil Tank Farm to support future operations.
Meanwhile, Ceylon Petroleum Common Workers’ Union (CPCWU) President Ashoka Ranwala alleged that higher-level officials of the refinery had been promised director posts in the new company the Government was planning on forming, due to which they were not opposing the move.
“If they go ahead with this move, a number of employees will lose their jobs. Sri Lanka has only one refinery. If they privatise it, the Government will lose control over the entire petroleum sector,” he stressed.
Early this year, the Cabinet approved a procurement process to find an investor for developing the Upper Tank area in China Harbour, Trincomalee. This plan includes leasing 61 out of 99 fuel tanks to Trinco Petroleum Terminal Ltd. for 50 years.
The development will follow a 16-year plan in seven phases, starting with renovating nine tanks, laying a 1.75 kilometre pipeline, and building supporting facilities on a Build, Operate, and Transfer (BOT) basis.
The Sapugaskanda Oil Refinery, built with Iran’s help in 1969, currently meets only 25% of local refined petroleum needs. Plans to expand it have been halted due to high costs, with a 2010 study estimating a $ 2 billion price tag for upgrades.
The Government aims to make the refinery a separate public enterprise to attract investments and modernise SOEs for better economic efficiency.
In November 2023, the Cabinet also awarded a $ 4.5 billion contract to China Petroleum and Chemical Corporation (Sinopec) to build a new refinery and processing centre in Hambantota, marking the largest investment since the economic crisis.