Refining Plan

August 29, 2007 (LBO) – The Ceylon Petroleum Corporation (CPC), Sri Lanka's state-owned oil refiner and distributor, is evaluating bids from two parties to conduct a feasibility study for its refinery expansion, a top official said. De Mel wants to acquire a hydro-cracker that can increase the yield of diesel in particular.

Updated "We have now come down to two parties," CPC Chairman Ashantha de Mel said. "It will take roughly about four months for the feasibility [to finish]."

Expansion

CPC is hoping to advertise a contract to double production at its 50,000 barrels per day refinery around January 2008.

The refinery expansion is expected to cost around 800 million dollars. The utility had been talking with the government about getting about 400 million dollars from a bilateral source via the Treasury.

The key to financing the refinery is the pricing formula for its products.

De Mel says he is confident of getting commercial funding based on the feasibility if the refinery is allowed to commercially price its output.

"On financing basically the most important thing was that CPC was able to move their prices up and down and become financially viable," de Mel told LBO.

"As long

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