The Hon. Anura Karunathilaka

¶ 01 We are already seeing global shifts in energy. Some countries have taken decisions, and after 2035 more attention will go to natural gas (LNG). Some researchers say even that will gradually reduce, mainly because of advances and results in hydrogen and renewable energy research drawing global focus to new alternative energy sources.

¶ 02 As discussed, Sri Lanka has significant wind potential, particularly in the northern coastal and near-offshore areas, with feasibility studies indicating about 30–50 GW. Solar power generation currently operating is around 1,400 MW. Our policy statement proposed increasing this to 2,000 MW, and we now see scope to go beyond that, prioritizing rooftop solar and solar parks. Steps are already underway. The President, as Minister of Finance, drew attention to this in the Budget speech, and relevant Cabinet approvals have been obtained.

¶ 03 I must note that, comparatively, generation costs from renewables are low. Some project offers have come as low as US cents 4.65 per kWh. However, while we focused on solar for some time, insufficient attention was paid to grid stability and balance. When solar penetration rose, any disturbance made restoring stability difficult. The CEB is addressing this now.

¶ 04 Although the world is moving towards renewables, Asia’s transition will take time given our economic and social context. We have underused Sri Lanka’s strategic location to act as a hub in the global and regional energy market. As stated on page 167 of our policy statement, we aim to make Sri Lanka, particularly in this region, a center in the energy marketplace. Many slogans about “knowledge hubs” were heard before, but practical steps were lacking. To become an energy hub, we must build the necessary infrastructure, notably refining capacity.

¶ 05 We are proceeding with a refinery at Hambantota with Chinese investment, primarily export-oriented. Sapugaskanda modernization had long discussions; a foundation stone was laid in 2007 without a feasibility study or even Cabinet approval, and nothing progressed. A new feasibility in 2022 enabled us to move forward. We have called EoIs based on that study. Sapugaskanda’s current capacity is about 50,000 barrels per day; we are working to add a 150,000 bpd refinery.

¶ 06 Positioning Sri Lanka in relation to Singapore—today’s major oil trading center—and Middle Eastern production, we can capture market share with refining here, aided by reduced voyage time. Refineries bring by-products. Estimates indicate about 440 metric tons of sulfur per day, which can be used to produce sulfuric acid. With our rock phosphate resources, we can produce triple superphosphate, easing fertilizer issues and saving foreign exchange currently spent on importing sulfur from India.

¶ 07 On Trincomalee, no discussion on energy is complete without it. There are 15 tanks leased to India in the Lower Tank Farm, and 61 tanks in the Upper Tank Farm under a joint venture between IOC and CPC-related TPTL (49% IOC, 51% TPTL). Our policy states we will review existing agreements and devise a model for CPC’s 24 tanks and the JV’s 61 tanks to benefit the national economy. Work has begun. Four of CPC’s 24 tanks have already been refurbished. We are in talks with international investors—including from France and Japan—to use these as international storage.

¶ 08 Trincomalee is the world’s second deepest natural harbor, able to berth the largest vessels. Using its strategic and natural advantages, we are developing an LNG center there. The Ceylon Petroleum Corporation is working to establish an LNG trading hub at Trincomalee.

¶ 09 Energy strategy must align with broader economic plans. Tourism is a growth driver; with increased flights to Sri Lanka, we must ensure adequate aviation fuel supply. We have commenced supplying 69% of jet fuel from Muthurajawela to Katunayake via pipeline. A Korean company’s prior concessions were halted by the previous government; now CPC is investing to complete the pipeline, with tenders to be called.

¶ 10 On the Colombo–Kolonnawa–Port pipeline network: although seven main lines exist, poor maintenance has reduced usable lines to four, causing losses of USD 5–10 million due to vessel demurrage when ships wait 4–5 days. Proper maintenance can cut this to two days, saving significant sums. Modernization has started. CPC is undertaking this with financing, enabling us to retain USD 5–10 million domestically and improve storage efficiency.

¶ 11 On the lubricants market: the previous government allowed other companies to sell their lubes at our fuel outlets, but CPC lubes could not be sold at others’ sheds. One reason was conflicts of interest: a person linked to multiple lube importers had close ties to the former Power and Energy Minister’s family. After the National People’s Power (NPP) government came in, the new CPC Chairman cancelled old agreements and doubled CPC’s lube sales. Notably, CPC’s lubricants are the only local lubes with American Petroleum Institute (API) certification.

¶ 12 On governance and appointments: recruitment must focus on merit and organizational progress. However, in LIOC/CEB spheres there were politicized appointments. For instance, a former fuel pump attendant was appointed to the CPC Board without requisite qualifications, was released full-time for union work despite the union having only about 650 members (below the 1,000 required), and was paid Rs. 3,111,601 as overtime during that period. This is neither lawful nor ethical. The individual, Ananda Palitha, is said to now serve on a political party’s executive. Such practices undermine institutions. We urge serious reflection and corrective action.

¶ 13 It was said in this House that only four of 41 energy actions in our policy are underway. Our “Prosperous Country – Beautiful Life” policy (pp. 162–168) lists 42 items. In the three-plus months since government formation, we have initiated 10 of the 41 energy actions—about 22%—with five years of mandate to complete the rest.