Sri Lanka’s Sunday Observer reported yesterday that Chevron Lubricants Lanka (LLUB), Sri Lanka’s largest lubricant industry player, will invest an estimated Rs 1.9 billion (USD 15 million) in the construction of a new state-of-the-art lubricant blending plant at Lindel Industrial Zone, Sapugaskanda.

Plans to relocate the plant were first announced in March last year on the heels of LLUB’s highest earnings in its history in 2011, with a net profit of Rs 2 billion, up from Rs 1.5 billion the previous year.

The construction of the new facility is a part of the company’s plan to relocate operations when the lease agreement with Ceylon Petroleum Storage Terminals Limited ends in July next year. Instead of making the new plant a replica of the old one, there will be more capital injected into the plant in terms of modern equipment, Chevron Lubricants, Managing Director Kishu Gomes told the Sunday Observer Business.

Gomes said. LLUB, which dominates the local market with approximately 57 percent of market share, will use internally generated funds to construct the plant. It is expected to fully relocate its operations in the second quarter of 2014.

Sri Lanka's lubricant market is reportedly estimated at 60 million litres a year

According to the company’s most recent financial statements, LLUB made a profit of Rs 1.72 billion during the first nine months ended September 30, 2012 compared to Rs 1.44 billion during the corresponding period in 2011.

The company’s profit forecast for 2013 stands at Rs 2.47 billion and Rs 2.67 billion for 2014 representing a growth of 10 and 8 percent respectively.

Sri Lanka's petroleum industry became a state monopoly in the 1960s as property rights were violated by the state and existing petroleum firms were expropriated. Lubricants became a private monopoly in the mid 1990s after Ceylon Petroleum Corporation privatized its Lubricants to Caltex, which is now part of Chevron.