Sinopec refinery deal in Sri Lanka set for finalisation in December
The Morning: The final agreement with Sinopec concerning the delayed $ 3.7 billion refinery project in Hambantota is expected to be finalised by December, the Ministry of Energy reveals.
Speaking to The Sunday Morning Business, Ministry of Energy Secretary Prof. K.T.M. Udayanga Hemapala stated that the agreement for the establishment of the refinery project in Hambantota by Sinopec had not been cancelled and that the parties were continuing negotiations to resolve the remaining issues.
He further expressed optimism that the agreement would be finalised and executed by December.
“We haven’t entered into an official agreement with Sinopec yet. It will take about another three months and will likely take until December to finish the process,” he stated.
Commenting further on the previous dispute concerning local market access for the refinery, Prof. Hemapala stated that, in principle, Sinopec had now agreed to proceed with the 20% local market access cap imposed by the Government, adding that the current delay pertained to certain other outstanding matters.
However, he noted that negotiations between the parties were still ongoing, no binding commitments had yet been made, and both parties would continue to negotiate in good faith to reach a mutually acceptable solution.
Prof. Hemapala further revealed that Expressions of Interest (EOIs) had been invited for the development and expansion of the Sapugaskanda Oil Refinery, and that 20 EOIs had been received in response, which were now being evaluated.
He added that the evaluation process would take around three months.
It has been reported that Sinopec is one of the parties that had submitted EOIs for the project.
The Energy Ministry Secretary further revealed that no decision had yet been made regarding the approach to be taken for the redevelopment of the Sapugaskanda Oil Refinery. The authorities are considering either upgrading the existing facility or establishing a completely new refinery.
Similarly, the structure and mode of investment for the project will depend on the proposals received through the EOIs, and options such as Public-Private Partnerships (PPPs) or Build-Operate-Transfer (BOT) models may be considered.
OSL take:
While key economic sectors in Sri Lanka have shown a steady growth resulting in the expansion of business/investment opportunities, the country’s ongoing development drive has added to the increase in these opportunities. Among the sectors that have shown an expansion in opportunities is the energy industry. The many sectors under the energy industry that range from the retail fuel business to the refining and oil bunkering have all presented lucrative business/investment opportunities for foreign businesses/investors. Given the ongoing economic expansion in Sri Lanka and its target of achieving regional hub status, there is a growth in the country’s energy demand. The growth and profits recorded by businesses already engaged in Sri Lanka’s energy industry and the increased interest among local and foreign businesses to enter the industry indicate the increasing business potential in the industry and related sectors. With the Sri Lankan government also opening the retail fuel market and looking at increasing the capacity of refining oil to meet the local demand and that of the maritime industry, foreign businesses/investors could explore the lucrative opportunities in Sri Lanka’s energy industry and related sectors.
| Article Code : | VBS/AT/20251021/Z_1 |