Land lease deal with non-starter oil refinery in Hambantota to be cancelled

The government has decided to terminate the agreement entered in 2019 to lease 1, 200 acres of land in Hambantota to Hambantota Oil Refinery Pvt Ltd.,an affiliate company to Singapore-based petroleum and coal trading company Sugih Energy International Pte Ltd., to build a petroleum refinery.

President Ranil Wickremesinghe in his capacity as the Minister of Investment Promotion this week sought the approval of the Cabinet of Ministers to cancel the agreement due to the failure in implementing the project to-date.
The Cabinet of Ministers on 17th of November in 2019 approved the proposal for the Board of Investment of Sri Lanka to enter into agreement with Hambantota Oil refinery (Pvt) Ltd. for the construction of a petroleum refinery with a capacity of 420, 000 barrels per day in the Hambantota area to cater only to the export market. 

Accordingly, 1,200 acres of land was allocated on a 50-year long-term lease basis for the implementation of the project. 

“But the project proponent has not acquired the relevant land on lease basis and the project has not been implemented till now. The project proponent has been informed several times in writing regarding the implementation of the project, but he has not responded. The project proponent has not acted according to the provisions of the agreement reached between the two parties,” the Department of Government Information said.
Export revenue envisaged upon commissioning of the refinery was expected to be around US$ 8 – 9 billion annually.