The government of Sri Lanka has spent Rs. 1,684.53 million on a feasibility study and land acquisition aimed at expanding the Sapugaskanda refinery and building a second refinery to bolster energy security, yet the project remains unimplemented. An audit report revealed that Rs. 171.39 million was spent in 2021 alone for the feasibility study, but no physical progress has been achieved in modernizing or expanding the existing refinery. The land acquired for this purpose remains idle, with no economically productive use by the Petroleum Corporation.
Sri Lanka continues to face heavy costs for energy imports, spending approximately $4,233 million annually on crude oil and petroleum products, which accounts for 25.2 percent of the country’s total import expenditure. Of this, $3,095.50 million is allocated for importing finished petroleum products. The Sapugaskanda Refinery meets only about 25 percent of the nation’s fuel demand, while the remaining 75 percent is dependent on imports.
In response, the Ministry of Energy announced that since the current government took office, it has invited bids from international companies to construct a new refinery with a capacity of 10,000 barrels per day. Around 20 bids have reportedly been received, and the Ministry stated that evaluation of the submissions is currently underway. The initiative aims to reduce dependency on imported fuel and improve national energy security, although the previous delays highlight ongoing challenges in implementing large-scale energy projects.
