Opportunity Sri Lanka | » Sri Lanka to fast-track $ 3.7 billion Sinopec oil refinery
Sri Lanka to fast-track $ 3.7 billion Sinopec oil refinery

Sri Lanka to fast-track $ 3.7 billion Sinopec oil refinery

Daily FT: Foreign Minister Vijitha Herath yesterday clarified that the recently signed agreement with Chinese energy giant Sinopec was to expedite the long-delayed $ 3.7 billion oil refinery project at the Hambantota Port.
Addressing the media, he highlighted the significance of the deal, which gained renewed momentum during the recent visit to China led by President Anura Kumara Dissanayake, in boosting economic ties and securing foreign investment.
“This refinery has been under discussion for many years and during the recent visit, the Government committed to fast-track the initiative,” he added.
Originally, on 27 November 2023, the Cabinet of Ministers approved Sinopec’s oil refinery project, envisioned as a state-of-the-art facility with a refining capacity of 200,000 barrels per day.
Herath also clarified the composition of the $ 3.7 billion investment amid claims that the original investment was cited as $ 4 billion on a post made by former Power and Energy Minister Kanchana Wijesekera via ‘X’ (https://www.ft.lk/front-page/Cabinet-green-lights-4-b-Sinopec-deal-for-new-petroleum-refinery-in-Hambantota/44-755690).
“The total investment includes $ 1.78 billion in direct investment, $ 1.53 billion for construction costs (excluding VAT deduction), $ 68.1 million in construction-related interest, and $ 181.47 million allocated for working capital,” Herath disclosed.
He also said the new agreement signed covers critical aspects of the project, including land allocation, water supply, duty concessions, and the portion of refined fuel earmarked for the local market.
“It was agreed by both countries that these factors would be finalised within a month following the agreement’s signing,” he said, noting that Sinopec will determine the share of fuel to be used for bunkering, exports, to which countries, and how much of oil would be released to the local market.
The Minister underscored the potential economic benefits for Sri Lanka, drawing parallels to Singapore’s success in generating foreign exchange through similar investments in land and infrastructure.
“We have worked to ensure the deal is structured to maximise benefits for Sri Lanka,” he stressed.
Herath assured that Sri Lanka will benefit from leasing of land, export revenue, machinery and construction of the project.
A key development during recent negotiations in China, he said, was Sinopec’s request for an additional 200 acres of land, increasing the total land requirement from 500 acres to 700 acres.
“Nothing was agreed upon and it will be discussed during this month’s period on the above-mentioned critical factors,” he stated.
Reiterating the Government’s commitment to fast-track the refinery’s development, he said: “We are optimistic about breaking ground as soon as possible.”

OSL take:
Sri Lanka’s development programme in-line with the country’s target of achieving hub status in the South Asian region has presented a host of new business/investment opportunities. With the country’s economy on an expansion path while working towards becoming a regional hub, there’s an overall expansion in thr business/investment opportunities covering all key economic sectors in the country. The increasing business potential in Sri Lanka is evident by the interest shown by foreign businesses/investors to explore the growing business/investment opportunities in the country. Sectors like power, energy, tourism, agriculture and health are fast becoming hotspots for business/investment opportunities. Given all these growing opportunities and increasing business potential in the country, foreign businesses/investors could confidently explore the expanding opportunities in the country while also looking at indirect opportunities in the already operational development projects in Sri Lanka.

Share this:

Article Code : VBS/AT/20250127/Z_4

    For More Info and Help






    Leave a Comment