By Nishel Fernando 
The Board of Investment (BOI), within this week, is expected to sign the 50-year lease agreement with Silver Park International (Pte) Ltd, a Singaporean investment vehicle owned by India’s Accord Group, to formally handover the 200 acres of land allocated for the US $ 3.85 billion oil refinery project in the Mirijjawila Export Processing Zone (EPZ), Hambantota. 

Development Strategies and International Trade Deputy Minister Nalin Bandara said Silver Park International has already paid 10 percent of the US $ 4 million lease payment for the land, while the balance is scheduled to be settled within this week. He made these remarks yesterday chairing the 18th Exporters Forum, organised by the Export Development Board, at its premises in Colombo. 

Speaking to Mirror Business, BOI Director General Champika Malalgoda also confirmed that the BOI will shortly sign the lease agreement with Silver Park International, as the apex investment promotion agency is currently finalising the documents for the lease agreement. 

Silver Park International along with Oman Oil Company, an entity owned by the Oman government, is expected to invest around US $ 1.8 billion under phase one of the project, to construct an oil tank farm, pipeline system and other necessary infrastructure.

The first phase is expected to be completed within two years.

Under phase two, the proposed oil refinery is planned to be set up on 385 acres of land that currently belongs to the Mahaweli Authority, outside the Mirijjawila EPZ.
The BOI last month announced that Silver Park International would hold a 70 percent stake in the joint venture project, while Oman Oil Company would hold the remaining 30 percent.

Although Oman’s Oil and Gas Ministry is yet to formalise its commitment to the project, Bandara stressed that the Government of Oman has given its assurance on its interest in the project to the Government of Sri Lanka, as well as to Silver Park International.

Development Strategies and International Trade Minister Malik Samarawickrema and Petroleum Resources Development Minister Kabir Hashim are expected to discuss the details of the project with the Omani government officials, during their visit to Oman on May 4.

Bandara said Oman Oil Minister Mohammed bin Hamad Al Rumhy, who attended the groundbreaking ceremony of the oil refinery project in Hambantota, last month, had also expressed interest to invest in manufacturing petrochemical by-products such as fertiliser and polyesters. 

According to him, the Government of Sri Lanka is also exploring the possibilities to acquire a 3-5 percent stake in the project through Ceylon Petroleum Corporation. 
Bandara pointed out that India’s Accord Group has the financial capacity to fund the project entirely by itself, as the group’s assets are valued over US $ 7 billion.

Further, he added that Accord Group has diversified interests in utility, hospitality, education, distilleries, media, IT and many other sectors in India and across the world. 

Hence, he stressed that Oman is a strategic investor in the project in terms of its technical expertise in the field and in terms of sourcing crude oil.   

Reuters quoting Accord Group Chairman S. Jagatrakshakan, a former Indian government minister, reported that the group plans to get 20-30 investors on board for the 30 percent equity investment in the project, while Accord Group would bankroll 70 percent of the project by debt from financial institutions. 

Bandara also said more investors would join the project in the coming months and it would drastically transform the announced equity structure.  
If realised, the US $ 3.85 billion refinery project will be Sri Lanka’s largest FDI to date. 

The oil refinery is scheduled to come into operation in four years and is expected to generate additional US $ 7 billion of exports per annum by exporting a minimum of nine million metric tonnes of petroleum products per year.