Lanka IOC said recently that it expects to complete construction of Sri Lanka’s first grease plant by the end of this year and that the 3,000 metric tons per year facility will be big enough to supply all of the country’s demand.
The company, a subsidiary of Mumbai-based Indian Oil Corp. Ltd., said the plant aligns with the island nation’s goal of reducing dependency of products produced overseas. “This is in line with the government’s policy for import substitution,” the company stated in its fiscal year 2019-2020 annual report released in October. “Presently the country’s grease product requirement is met from imports.”
The plant is being built in Trincomalee, on Sri Lanka’s east coast. Lanka IOC said it could change the dynamics of the country’s grease market if some of its rivals contract Lanka IOC to produce their own grease. The company said it also expects to grab a bigger slice of the market.
“We can expand our market share significantly once our grease plant is commissioned, as we would have a significant cost advantage over those selling imported grease and also this would lead to significant foreign exchange savings annually,” the company said. “All of the others users who import grease at present will also get the benefit of the potential cost reductions.”
According to the annual report, the company decided to manufacture grease locally – after having always imported such products – to save on foreign currency and improve its operational cost structure. It started construction on the grease plant in January.
The government of Sri Lanka requires companies to obtain licenses either to produce or sell lubricants within the country. Four blending plants operate on the island currently – one of them owned by Lanka IOC – but none of them make grease.