Sri Lanka’s largest proposed foreign direct investment, the $3.7 billion Sinopec oil refinery in Hambantota, has come to a standstill amid an unresolved dispute over how much of its refined products can be sold within the domestic market.
The refinery, a highly-anticipated joint venture with Chinese energy giant Sinopec, was formalised during President Anura Kumara Dissanayake’s state visit to Beijing earlier this year.
Positioned strategically near the Chinese-managed Hambantota Port, the proposed facility is designed to process 200,000 barrels of crude oil per day, with the vast majority of output targeted for export.
However, no investment has materialised to date, and the project remains in limbo due to a deadlock in negotiations.
The Government’s original tender conditions limit the sale of refined products in the local market to 20%, with the remaining 80% designated for export—an arrangement aimed at boosting Sri Lanka’s foreign exchange earnings.
Sinopec has reportedly requested more leeway to sell within the domestic market, triggering a policy and procedural impasse.
Ministry of Energy Secretary Prof. Udayanga Hemapala confirmed that discussions are ongoing, but no timeline for resolution has been established.
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