Sri Lankan government re-commences manufacturing of bitumen due to growth in local construction industry
The local media in Sri Lanka has reported that the Ceylon Petroleum Corporation (CPC) has re-ventured into manufacturing bitumen after six years due to the rapid growth in the local construction industry and increased demand for bitumen.
Accordingly, bitumen is to be manufactured in the country’s sole refinery located in Sapugaskanda.
Petroleum Resources Development Minister Arjuna Ranatunga has reportedly described the venture as a re-strategised effort of the CPC, particularly in the operations of Sapugaskanda refinery to support the bitumen manufacturing process.
“By commencing bitumen production after six long years, we envision contributing towards the sustainable growth of the country, enabling us to produce quality material in-house and save a substantial amount of Government funds that would be otherwise spent on importing finished product,” Ranatunga has been quoted as saying in the local media.
The Minister has stated that bitumen was a profit-making business model that was closed down in 2012, resulting in the fall of CPC’s then-75% market share to below 25% today.
However, the Minister has reportedly expressed confidence in the CPC staff, adding that it will be a turnaround as the market leader once again.
According to Ranatunga, an memorandum of understanding (MOU) regarding the second refinery in the country with a foreign investor is expected to be signed by the end of this year.
“My intention is to build a new refinery in the next 18 months, with the help of foreign investors. Already we have received around four to five proposals, and I expect that we could sign a MOU with a viable investor by the end of this year,” the Minister has added.
According to reports, the refinery investment is about US$ 2 billion to US$ 2.5 billion, which will have the capacity to produce 125,000 barrels per day or more, with potential to re-export the excess production. The current capacity at the Sapugaskanda refinery is around 35,000 to 38,000 barrels per day.
The Cabinet of Ministers is expected to finalize the project shortly.
The Sri Lankan government’s decision to re-commence the manufacture of bitumen in the country is indicative of the growth in demand for the respective petroleum product. The statement by the Petroleum Minister of Sri Lanka also indicates a rapid growth in the country’s construction industry, which is a positive sign for foreign companies considering investing in Sri Lanka’s construction sector. Also, the Sri Lankan government’s decision to construct a second oil refinery indicates growing investment/business opportunities in the country’s petroleum sector.
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