Sri Lanka is projected to award a multi-billion dollar oil refinery project to a Chinese state-owned company, following the pulling out of a rival bidder.
On Tuesday (31), energy minister Kanchana Wijesekera said the government would soon enter into an investment agreement with Sinopec for the establishment of the refinery. It is set to be built next to the Chinese-run port at the town of Hambantota.
Wijesekera told Columbo reporters that “there were only two bidders shortlisted and Vitol pulled out. That leaves only Sinopec and we will finalise an agreement with them in a couple of weeks”.
The project, with an estimated cost of $3.85 billion, was initially awarded to an Indian family-owned company based in Singapore in 2019.
The government terminated the agreement in August after Silver Park International failed to start construction. The 1,200 acres (485 hectares) of land allocated for the refinery was repossessed. In 2017, Hambantota was controversially leased to a Chinese state-owned firm for 99 years, after Sri Lanka was unable to service a $1.4 billion loan taken for the project.
In an unprecedented economic crisis, partly blamed on Chinese loans used to build several white-elephant infrastructure projects between 2005 and 2015, Sri Lanka defaulted on its $46 billion external debt last year.
52 percent of Sri Lanka’s bilateral debt is owned by China, with Beijing’s approval being crucial for any efforts by Colombo to restructure its outstanding loans.
