Sri Lanka has been long negotiating a credit of up to $2bn with lenders including China, Russia, and South Korea to upgrade and double the capacity of the refinery, after the government failed to find an investment partner for a proposed Iranian-backed overhaul. IOC had said last week it was willing to offer expertise to upgrade the facility but Premjayantha said that Sri Lanka had not accepted the offer.Premjayantha said that with IOC already operating a majority of fuel stations in Sri Lanka and as a result increasing fuel prices at will, handing over the refinery to the same company could hurt the local fuel distribution sector. IOC controls one third of Sri Lanka’s retail fuel market and has been operating in the country since 2003Sri Lanka is seeking alternative crude oil suppliers in view of the US sanctions on Iran coming into force from June this year.Over 90 per cent of Sri Lanka’s crude oil requirements come from Iran. He said that Sri Lanka needs to upgrade the facility in order to refine oil from other countries as the import of Iranian oil will be reduced owing to sanctions imposed on Iran by the United States. Premjayantha said that approximately USD 500 million will be required to upgrade the facilities at the refinery and Sri Lanka will seek expressions of interest to carry out the work. Sri Lanka has rejected an Indian offer to upgrade a local refinery which is built to refine only Iranian oil.Petroleum Resources Minister Susil Premjayantha said that the offer to upgrade the Sapugaskanda oil refinery had come from the Indian Oil Corporation (IOC) which operates most of the fuel sheds in Sri Lanka.