Sri Lanka is poised to present the final Cabinet paper seeking approval to enter into agreements with China Petroleum and Chemical Corporation (Sinopec) for the construction of a state-of-the-art petroleum refinery and an associated product processing centre in Hambantota.
As learnt by The Sunday Morning, the proposal is slated to be submitted to the Cabinet in May.
Sinopec is one of the world’s leading refineries and one of the largest petrochemical producers. The company, which already owns refinery assets in Saudi Arabia and engages in petrochemical production in Russia, is set to invest in a breakthrough project in Sri Lanka.
Last February, the Ministry of Power and Energy invited Expressions of Interest (EOIs) from qualified investors to establish an export-oriented petroleum refinery in Hambantota.
Accordingly, seven investors expressed their interest and after evaluating the submitted proposals, two institutions were qualified to submit detailed proposals. Those two institutions were informed in June 2023 to submit their detailed proposals, however, only one institution had submitted its detailed proposal. Currently, the project committee and the Cabinet-Appointed Negotiation Committee (CANC) are negotiating with the investor.
Speaking to The Sunday Morning, Power and Energy Ministry Secretary Sulakshana Jayawardena said that there were several proposals that had come through the EOI process and the CANC had selected one out of seven, considering the terms and conditions issued to them to submit their Requests for Proposal (RFPs).
“Now we are in the negotiation process with the selected investor,” he said. “The evaluation process is done. We are now discussing and negotiating the terms of the contract agreements and relevant provisions. They are almost finalised, except for a few provisions. We need to get feedback from the Central Bank and the Treasury. Once we complete the negotiation process, we need to get clearance from the Attorney General and obtain Cabinet approval to sign the agreements,” Jayawardena said.
“We are trying our best to complete the negotiations by the end of April and submit for Cabinet approval by the end of May. We need to give some time to the AG’s Department to go through the agreement and get its concurrence as well,” the Secretary added.
The proposed refinery project in Sri Lanka is set to have a minimum capacity of 100,000 barrels per day, with an expected investment ranging between $ 1.5-2 billion. The project is scheduled to be implemented from 2024 to 2027.
Anticipated outcomes of this venture include catalysing export-driven high-value investments for the country’s rapid and sustainable growth. The project is poised to create substantial direct employment opportunities for Sri Lankans, spanning various roles such as operators, technicians, graduates, engineers, and chemists, while also generating additional indirect employment opportunities in support services.
With a focus on meeting international standards, the modern refinery is expected to play a pivotal role in boosting liquid cargo shipments to the Hambantota Port. This strategic move is projected to bring in added revenue in foreign currency through the movement of ships carrying both crude oil and finished products.
Furthermore, the project aims to enhance Sri Lanka’s energy security by increasing the availability of refined petroleum products domestically.