Govt. yet to reach final decision on Sinopec refinery

Colombo, July 3 (Daily Mirror) - The government is yet to reach any final decision on the proposed investment of US$ 3.7 billion by Chinese state giant Sinopec mainly due to disagreements on terms and conditions of the project despite the lapse of more than one and half years after signing the MoU.

The company secured the initial approval for investment in the establishment of an oil refinery in Hambantota in 2023. After that, the MoU for the project, cited as the largest Foreign Direct Investment (FDI) of Sri Lanka, was signed during President Anura Kumara Dissanayake’s visit to China in January, 2025. It was his second trip undertaken after assuming office in September 2024.

If the project is implemented, it will have capacity to process 200,000 barrels of crude oil per day. Sri Lanka has agreed to allow the company to sell 20 percent of the output locally and the rest to be exported. However, the company has sought more access to the local market. For that purpose, amendments to the original agreement have been sought.

When Chinese Foreign Minister Wang Yi met with his Sri Lankan counterpart Vijitha Herath earlier, the project was discussed. At that time, Minister Herath conveyed that the Agreement related to the project in Hambantota would be finalized in the first quarter of 2026.

However, a top government source said that outstanding issues regarding the terms and conditions of the project are yet to be sorted out.

“The project is unlikely to take off at least in the foreseeable future,” the source said.

According to the source, the government has certain limitations in granting special concessions to a specific project because of the programme with the International Monetary Fund (IMF) which seeks a level playing field.