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by Ravi Ladduwahetty and Uditha Kumarasinghe

The Government is to lease a section of the Sapugaskanda Oil Refinery to Global Energy and Industrial Operations Inc. (GEIO) of USA.

GEIO will pay the Ceylon Petroleum Corporation (CPC) US$ 10.67 million ( around Rs.1.02 billion) for this under-used and non-revenue generating section.

CPC Chairman Daham Wimalasena told the Daily News last night that this will be on a 20 year lease. The assets of the refinery, the leased land and facilities will be transferred to the CPC.

The CPC Chief said this was neither a sell out nor part of the privatisation programme. The project will run in parallel with the CPC owned Sapugaskanda oil refinery.

He said the GEIO proposal was among a few others which the Government received. All of them were asked to deliver presentations on May 6 at the Board of Investment (BOI).

The BOI had approved two proposals. The selection procedure had been far superior than those followed by the PA for a similar refinery project, Wimalasena said.

GEIO engages in the interphase between the public and private sectors in infrastructure development, identifies projects of national importance and works with state agencies to obtain approvals with potential investors.

GEIO is negotiating with collaborators - two leading Japanese and a Korean company to fund and implement the project. Commitments have been received from there US funds to take equity in the project. Two Sri Lankan listed blue chips have also taken an aggregate equity of 40 per cent of the equity requirement.

Meanwhile, PA Media Spokesman Dr. Sarath Amunugama, addressing a news conference yesterday, challenged the Government to disclose the details of the agreement with GEIO.

He said: "The PA will question the Government about the GEIO. Why this deal was not made through a worldwide tender is baffling."

This company has been selected on a private discussion conducted by Government Advisor R.Paskaralingam with the GEIO. The decision to sell these two concerns to the American company had been directly forwarded for Cabinet approval, Amunugama told the PA weekly press briefing yesterday.

He said the President has already informed the Government that she would not agree to this deal. He said under the IMF recommendations, the Government has already taken several steps to privatise the CPC.

Amunugama said that on the IMF recommendation, the Government has begun selling Government properties. The intention of the Government is to obtain Rs.23 billion from the IMF before the budget, he added.

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