Indian-owned Indian Oil Corp is eyeing a contract to revamp and expand the sole refinery in Sri Lanka.

IOC’s interest in upgrading and doubling capacity of Ceylon Petroleum Corp’s (CPC) Sapugaskanda Refinery to 4 million tonnes a year came up at a meeting between Indian Oil Minister Murli Deora and his visiting Sri Lankan counterpart, Susil Premajayantha, here on Wednesday.

The Sri Lankan minister said his government will soon call for global expressions of interest in the capacity expansion project, which IOC could also participate in.

Deora also raised the issue of losses suffered by IOC’s Sri Lankan subsidiary, Lanka IOC, on the sale of fuel below cost at 152 retail outlets in the island nation.

 Premajayantha said Sri Lanka was planning to overhaul the taxation structure on petroleum products in the forthcoming Budget to be presented in Parliament on November 22 and indicated that levies on petrol and diesel may be slashed.

“If we reduce tax, there will be no losses (to Lanka IOC),” he said after the meeting, which was held on the sidelines of the Petrotech-2010 oil and gas conference here.

Nearly one-fourth of the petrol retail price of 115 Sri Lankan rupees (US$1.03) per litre is made up of taxes, which add up to 25 Sri Lankan rupees.

The island nation will announce a new policy for conversion of fuel-oil based power plants in the next two weeks, Premajayantha said.

He also disclosed that Sri Lanka plans to offer five concession areas under its forthcoming oil and gas licensing round in 2011, for which he invited state-owned Oil and Natural Gas Corp (ONGC) to bid, PTI reports.