Largest FDI under NPP govt. still in limbo

• $ 3.7 billion Sinopec investment yet to take off
• Differences between govt. and company over local market share
• Discussion in progress to solve the matter

Colombo, June 28 (Daily Mirror) - The $ 3.7 billion investment project by Sinopec in Hambantota - the largest ever Foreign Direct Investment (FDI) in Sri Lanka - is still in limbo even after the lapse of six months because of differences between the government and the company on the local market share component, Daily Mirror learns.

The agreement for the project was signed during the state visit of President Anura Kumara Dissanayake to Beijing early this year between Sri Lanka’s 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 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, Daily Mirror learns that Sinopec has sought unrestricted access to the local market for its refined products, whereas the government has placed a 20 per cent cap on it.

Asked about the current status of the project, a Power and Energy Ministry official who wished to remain anonymous said there is no agreement on the local market share for Sinopec yet. However, he said that discussions are ongoing for the conclusion of the matter as early as possible for the project to kick off.

Responding to a query about other matters such as land allocation and regulatory framework, he said those were minor matters that could be resolved easily.

In the meantime, Senior Fellow and Director of the Centre for South Asian Studies at the Shanghai Institutes for International Studies Prof. Liu Zongyi said earlier that Sinopec is facing obstacles here in the execution of the project.