China secures another strategic investment in Sri Lanka

• Sinopec to make US $ 1.5 billion investment in Hambantota oil refinery  
• Contract to be awarded in two weeks  
• It becomes the single largest FDI in Sri Lanka  
• More investments to follow in related activities of Sinopec 

By Kelum Bandara   

China’s Sinopec is to make an initial investment of US $ 1.5 billion, the single largest Foreign Direct Investment (FDI), in building a refinery in Hambantota once the agreement is finalized within the next two weeks, a top source said.   

It remained a foregone conclusion in political circles that the company will be awarded the project though the government says it is open for any company participating in the competitive bidding process.   

Previously, Colombo Port City, another Chinese investment, remained the largest FDI project in Sri Lanka. The source said Sinopec will make an investment of US $ 1.5 billion, but more money later in other related developments of the refinery. 

Hambantota is a deep-sea port constructed during the time of former President Mahinda Rajapaksa with financial assistance from China. However, the port was leased to Chinese state-owned firm ‘China Merchants ‘in 2017 for 99 years for US $ 1.12 billion.   

During the recent visit to China, President Ranil Wickremesinghe held talks with Sinopec Group Chairman Ma Yongsheng and top executives in Beijing last week. Sinopec has already entered Sri Lanka’s retail fuel market.   

 Sinopec secured the project since the only other contender to the project, Vitol Singapore, withdrew from the race.   
 Meanwhile, the operations of two other foreign fuel companies –the United States-based RM Parks and United Petroleum Australia – will be delayed. RM-Parks has deposited the performance bond, though.   

“We have placed a condition that they cannot remit their profits from fuel trading technically for two years after arrival of each shipment. Therefore, it becomes a huge initial investment for them. Therefore , they need time ,” the source said.       

• During the recent visit to China, President Ranil Wickremesinghe held talks with Sinopec Group Chairman Ma Yongsheng and top executives in Beijing last week. Sinopec has already entered Sri Lanka’s retail fuel market