• 20 EOIs received for Sapugaskanda expansion, evaluations ongoing 
• Sinopec seeks 40% local market share, Govt. withholds approval

The results of the evaluation of the Expressions of Interest (EOIs) submitted for the development and expansion of the Sapugaskanda Oil Refinery will be a decisive factor in determining whether the already-delayed $ 3.7 billion investment project by Sinopec in Hambantota will continue or not, a senior official told The Sunday Morning. 

It is learnt that the Ceylon Petroleum Corporation (CPC) has received 20 EOIs for Sapugaskanda, which were evaluated last week. 

The results of the evaluation are expected to arrive this week. Sinopec is one of the parties that had submitted EOIs for the project. 

As reliably learnt, the results of the EOI evaluation will have a decisive effect on Sinopec’s decision on whether it will continue with the Hambantota investment, as the Government has not responded to Sinopec’s request to increase its local market share from 20% to 40%. 

The agreement for the project was signed during the State visit of President Anura Kumara Dissanayake to Beijing earlier this year, between the Ministry of Energy and Sinopec, which is a leading Chinese international petroleum corporation. 

Under this $ 3.7 billion investment, a state-of-the-art oil refinery with a capacity of 200,000 barrels per day is to be constructed in Hambantota. A substantial portion of the refinery’s output is planned for export, further enhancing the nation’s foreign exchange earnings. 

This major investment from China is expected to bolster Sri Lanka’s economic growth while uplifting the livelihoods of low-income communities in the Hambantota area. 

Moreover, the benefits of this project are anticipated to positively impact the overall Sri Lankan population in the near future, according to the President’s Media Division (PMD). 

However, The Sunday Morning reliably learns that while Sinopec has sought expanded access to the local market for its refined products, the Government has placed a 20% cap on it.

When contacted, CPC Managing Director (MD) Dr. Mayura Neththikumarage said: “Sinopec asked for permission to sell 40% of its product in the local market, but that approval was not given. The initial agreement was only for 20% in order to sell locally, and the Government has maintained that position.” 

He added: “Sinopec also participated in the Sapugaskanda Refinery EOI. I think they wanted to see what opportunities were there, and maybe they thought they could improve the percentage. But there has been no discussion yet, because the EOI process was only opened recently.”

“Officially, the bid opening committee has not given us the number of bidders who are eligible or not, because the evaluation was done only last week. But as far as I know, around 20 EOIs were received. We expect the results next week, when we can see who the eligible companies are. Sinopec is also there, so it will definitely be eligible,” Dr. Neththikumarage noted. 

“As far as I know, only 20% is given. I don’t know whether there was any discussion thereafter. We also could not meet the Sinopec team after that, so we couldn’t ask them directly. But I think with this EOI, they will have some other plan, that’s why they participated in it. We are waiting to see what they are planning,” he added. 

When asked whether the future of the Hambantota refinery investment would depend on the Sapugaskanda EOI results, the CPC MD said: “It’s not dependent on the EOI, but it will be a decisive factor. It’s not that their decision purely depends on that. When a company is investing in two locations, they will be interested to see what the total outlook is, rather than jumping to a one-sided conclusion. Sinopec never said that it would withdraw its investment if it did not receive this 40%. There is no such conclusion.” 

When asked about the long delay, he said: “Yes, it has been a year now, but the only thing is, in between, we published this EOI. Even before we published it, we announced that we were admitting that one. Since these are investments of around $ 3.7 billion and another $ 3 billion – almost $ 6.7 billion in total – one year is not that long for them to wait for such a large investment. And it’s not only about the time; it’s a strategic decision. Waiting for a few months is not that significant when you consider the strategic importance of the project.”