China makes another strategic investment in Sri Lanka
The refinery will come up in Hambantota, where China has already built a deep-sea port when Mahinda Rajapaksa, who belongs to the region, was the president of Sri Lanka
China’s Sinopec company is to make an initial investment of US$1.5 billion, the single largest foreign direct investment (FDI), to build a refinery in Hambantota in Sri Lanka.
This will happen once an agreement is finalised within the next two weeks, the Daily Mirror quoted “a top source” as saying.
The daily said it was a foregone conclusion in political circles that the Chinese firm would get the project “though the government says it is open to any company participating in the competitive bidding process”.
Until now, Colombo Port City, another Chinese investment, was the largest FDI project in Sri Lanka.
The Daily Mirror reported that after the initial investment, Sinopec would put in more money later in other related developments of the refinery.
Hambantota is a deep-sea port constructed when Mahinda Rajapaksa, who belongs to the region, was the president. It was built with financial assistance from China.
Ranil in Beijing
The deep-sea harbour was leased to Chinese state-owned firm China Merchants in 2017 for 99 years for US$1.12 billion. The Rajapaksa government had paid US$ 1.4 billion to a Chinese company to build it.
In China last week, President Ranil Wickremesinghe met 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 latest Hambantota project as the only other contender, Vitol Singapore, withdrew from the race.
Sinopec in August became the third player in the Sri Lankan fuel retail business by commencing operations at over 100 fuel stations in the island nation.
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.
China debt
Refined petroleum products are expected to be exported from the Hambantota port.
The Rajapaksa administration has been accused of sliding Sri Lanka into a Chinese debt trap by building expensive infrastructure projects with high-interest Chinese loans.
China remains Sri Lanka’s largest bilateral creditor.
(With agency inputs)
