Lanka IOC’s Rs. 400 million grease manufacturing plant in Sri Lanka to open this May
The Lanka Indian Oil Company (LIOC) PLC is to reportedly invest Rs. 400 million to build a grease manufacturing plant in Sri Lanka’s Eastern district of Trincomalee with over Rs. 300 million already being invested for the project. Local media reports stated that the opening scheduled for early this year was delayed due to logistical issues resulting to the global Covid 19 pandemic.
“However now we are confident that the plan which is a first to Sri Lanka can be opened by the end of May 2021,” Managing Director LIOC, Manoj Gupta has been quoted as saying in the Daily News.
He has observed that they will also start bunkering facilities through a floating barge in Hambantota shortly.
The LIOC Grease plant will have a capacity of 3,000 MT per annum, according to local media reports. “This grease plant, adjacent to our existing lube blending plant is in the final stages of installation and we are confident to deliver the first batch of locally manufactured world-class grease by 1st quarter of 2021,” Gupta has said.
According to the Daily News report, the grease market is a complex amalgam of commercial and passenger vehicles, 2 and 3 wheelers, agricultural equipment, stationary engines, marine and industries that range from steel, cement, power, mining, railroads, textiles, automobiles and glass. This new plant will not only generate additional employment but would help save valuable forex for the country as the country imports around US$ 7 million worth of Grease annually.
“In time we hope to reverse this pattern and bring Forex to Sri Lanka by exporting Grease,” he has said, adding that LIOC will also start bunkering facilities though a floating barge in Hambantota soon.
Gupta has also thanked the government of Sri Lanka for providing LIOC with tax reliefs to cushion out the escalating global oil prices. “A few months back crude was trading at US$ 50 per barrel and today it’s hovering at US$ 70 and this itself speaks to the volatility in the market.”
The Pandemic situation has put a lot of stress on the lube oil industry, with no availability of adequate base oil, prices of base oil are soaring. Steel prices have gone through the roof and Rs depreciation against USD is adding fuel to the fire. Certainly, there is huge pressure on margins. “We expect prices would stabilize by 3Q.”
The grease manufacturing plant being invested in by LIOC is indicative of the growing business/investment opportunities in Sri Lanka. The island’s economy is back on track after the temporary halt in operations due to the global Covid 19 pandemic. Sri Lanka’s geographical positioning in the Indian Ocean region and the many trade agreements as well as trade concessions enjoyed by the country have made it a business hub in the South Asian region. Foreign businesses/investors could therefore explore business/investment opportunities in Sri Lanka.
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