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| Rs. 60,000 million fraud in Iran aided oil refinery project |
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(Lanka-e-News, August 30, 2008, 9.40 AM) Lanka-e-News reports with responsibility that the second petroleum refinery of Sri Lanka that is to be established with the assistance of the state of Iran is more a massive fraud that pumps at least Rs. 60,000 million to the pockets of several bigwigs of the government than a project that brings long term benefits to the country.
According to the cabinet paper submitted by Minister of Petroleum and Petroleum Resources, the estimated total cost for the oil refinery is US $ 1600 million. Iran government bears 60% of it whilst the government of Sri Lanka should contribute the rest. This facility will refine 50,000 barrels of crude oil per day.
In 2003, a US company named 'Global Energy' submitted a proposal to the government to set up a second oil refinery. The estimated cost for it was US $ 800 million. The facility anticipated to refine 100,000 barrels of crude oil per day. The US company bears the entire cost for the venture whilst 25% of the shares will be offered free to the government of Sri Lanka. After 25 years. Sri Lanka government can claim for the ownership of the refinery by paying 1 $. Maintenance and repair of the refinery will be carried out by the company and the workers of the Ceylon Petroleum Corporation will be recruited for its services. However, this proposal was not accepted by Sri Lanka government. But it not the question we have to ask.
The problem we raise here is how 50,000 barrels per day capacity refinery can cost double the cost of 100,000 barrels per day capacity refinery. Did the cost for such refinery double within the period from 2003?
Several experts of the Ceylon Petroleum Corporation said to Lanka-e-News that the maximum cost to build a refinery with the capacity of 50,000 barrels per day is between Rs. 900-1000. They point out that if this project is carried out, a handsome amount of US $ 600 million (Rs. 60,000 million) will go to the hands of several persons. The trade unions of the Ceylon Petroleum Corporation urge the President to personally look into this issue.
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They further point out that the 40% of the capital the Sri Lanka government must share will have to be borrowed for a massive interest. Under these circumstances, this project will not be profitable even in 25 years. The cost of a refined barrel of petroleum of this refinery will be definitely higher than that can be imported from open market, they say.
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