Production and sale of LP Gas:

CPC to meet entire demand by 2015

*Shell to wind up and sell Lankan assets

*Offers high priced package deal

By a staff Corr.

With the expansion and modernization of the Sapugaskanda oil refinery the Ceylon Petroleum Corporation would be able to meet the entire domestic demand for LP Gas in the country, industry sources told the Daily News yesterday. The expansion would cost the Government Rs 15 billion. The current LP Gas consumption in the country is 130,000 mt.

It is expected to rise up to 150,000 by 2015. With the completion of the upgrading and expansion of the Sapugaskanda oil refinery it would be able to increase production up to 150,000 mt, thus meeting the entire local demand. Meanwhile, Shell Gas Lanka Ltd. and Shell Lanka Terminal Ltd., have offered to sell both enterprises to the Government. While the Government owns 49 percent of the shares of Shell Gas Lanka Ltd., the other company Shell Lanka Terminal Ltd., is fully owned by the Shell Group.

It is learnt they have offered the Government a package deal which quoted a huge amount which is several times higher than the price at which Shell Group bought the Colombo Gas Company in 1995 and ran a virtual monopoly till a Second player entered the local LP Gas market.

In December 1995 the Shell Group acquired the assets, liabilities and existing infrastructure of the Colombo Gas Company for a meagre US $ 30 million.

The assets of the Colombo Gas Company included besides the bulk storage plant at Orugodawatta, a mini filling plant at Mabima and regional depots at Kandy, Galle and an installation unit at Nawala.

Industry sources reveal that the decision of the Shell Group to wind up its LP Gas sales operations in Sri Lanka is due to the competition it expects from the development of the CPC refining capacities.

In another 42 months Shell would not be able to sell its assets in Sri Lanka for anything other than scrap metal as the CPC would produce the country's total requirement with the expansion of the Sapugaskanda oil refining plant complex.