China's Sinopec awarded Sri Lanka refinery bid

Sinopec, China's state-owned oil and gas giant, will be awarded the contract to build an oil refinery in the southern port of Hambantota
China's Sinopec awarded Sri Lanka refinery bid
China's Sinopec awarded Sri Lanka refinery bidEnergy Watch

Colombo: Sinopec, China's state-owned oil and gas giant, will be awarded the contract to build an oil refinery in the southern port of Hambantota, Sri Lanka's Energy Minister Kanchana Wijesekara said on Tuesday. "There were only two bidders shortlisted and Vitol (of Singapore) pulled out. That leaves only Sinopec and we will finalise an agreement with them in a couple of weeks," Wijesekera told reporters here.

The investment agreement would soon be entered with Sinopec, Wijesekara said. However, the minister made no mention either of the quantum of investment or the capacity of the refinery.

China's Sinopec 3rd-largest fuel retailer in Sri Lanka

Sinopec in August became the third player in the local fuel retail business by commencing operations at over 100 fuel stations in the country. Four years ago, the Sri Lankan government had awarded the same project, estimated to involve an investment of USD 3.85 billion, to an Indian family-owned company based in Singapore, but it failed to commence construction.

In August, the government terminated an agreement with Silver Park International and re-possessed 1,200 acres of land allocated for the refinery. President Ranil Wickremesinghe, who was then the prime minister, had attended the November 2019 ground-breaking ceremony of Silver Park.

Wickremesinghe had expressed hope the refinery in Hambantota, a deep sea port with proximity to busy shipping lanes between Asia and Europe, would attract more investment to the area. Refined petroleum products are expected to be exported from the Hambantota port.

The deep sea harbour was controversially leased to a Chinese state-owned firm in 2017 for 99 years for 1.12 billion dollars. The then President Mahinda Rajapaksa's government had paid USD 1.4 billion to a Chinese company to build it.

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Hambantota is Rajapaksa's home base and his administration was accused of fixing Sri Lanka in a Chinese debt trap by building expensive infrastructure projects with high-interest Chinese loans.

China remains Sri Lanka's largest bilateral creditor. Sri Lanka is yet to restructure its defaulted USD 46 billion external debt, a pre-condition of the International Monetary Fund (IMF) when it announced a 2.9 billion dollar bailout over a four-year period from March this year.

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