Nearly nine months after Sri Lanka signed a Memorandum of Understanding (MoU) with China’s Sinopec for a $3.7 billion oil refinery, the project remains stalled, with construction yet to begin and key terms still under dispute.
The proposed refinery, to be built near the Hambantota Port, is poised to become the country’s largest single foreign direct investment.
However, sources say the project has made little headway due to disagreements over taxation and the domestic sales quota for refined oil.
While Sri Lanka has offered Sinopec a 20% share of the local market, the Chinese state-owned firm is reportedly insisting on access to 40%, with the remainder of production intended for export.
The MoU was signed earlier this year during President Anura Kumara Dissanayake’s state visit to China.
In 2023, the Sri Lankan Cabinet approved the refinery plan, which is designed to have a processing capacity of 200,000 barrels per day.
Power and Energy Minister Kumara Jayakody had previously indicated that construction would commence within 2025. But with negotiations still deadlocked, questions are mounting over the future of what was hailed as a landmark investment in Sri Lanka’s energy sector.
Leave a comment