China's State-Owned Oil And Gas Giant Sinopec Wins 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, energy minister Kanchana Wijesekera 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," Mr Wijesekera told reporters here.

However, the Minister made no mention either of the quantum of investment or the capacity of the refinery.

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 $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.

Ranil 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. The then President Mahinda Rajapaksa's government had paid $1.4 billion to a Chinese company to build it.

Hambantota is Mr 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 $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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