US$5 bn China oil refinery project in Hambantota kicks start with cabinet approval next week.
By: Staff Writer
Colombo (LNW): Agreement for a 5 billion US dollar refinery to be built by China in Sri Lanka’s Hambantota district will be submitted to cabinet for consideration next week, Energy Minister Kanchana Wijesekera said.
“We have included in the agenda of the cabinet the awarding of the contract for the Hambantota new oil refinery,” Minister Wijesekera told parliament.
“If the cabinet approves, after the agreement is signed, it will be the single largest investment project ever. A 5 billion US dollar investment.”
The project will take about four to five years to complete. “After it is completed, it will create jobs, provide energy security and give an opportunity to increase exports,” Wijesekera said.
Sri Lanka is giving state land in the Southern Hambantota district for the project. China’s Sinopec was awarded the project after the second short-listed contender pulled out, Minister Wijesekera said last month.
The tender for Sri Lanka’s proposed $5 billion oil refinery in the investment zone near Chinese built Hambantota port has been awarded to Sinopec, a state minister confirmed. .
China’s Sinopec and Vitol Asia based in Singapore are the two firms shortlisted out of seven companies that responded to an expression of interest early this year.
“We have issued the RFPs (request for proposal) for the two firms shortlisted. They have submitted the RFPs,” State Power & Energy Minister D V Chanaka said.
“There is a process which involves Cabinet approvals and Ministries. Our expectation is to award the tender within a minimum three weeks.”
Sovereign debt defaulted Sri Lanka has been struggling to attract foreign inflows. The refinery is part of a strategy to attract more foreign investments into the bankrupted nation.
Government sources say the refinery was awarded to Sinopec which has already started retail fuel supply and is competing with LIOC, a fully-owned subsidiary of Indian Oil Corporation.
Sri Lanka received seven responses to an expression of interest (EOI) to build the export-oriented oil refinery in Hambantota, in the island’s Southern coast of Hambantota and next to a Chinese-owned port.
Grant & Shearer Ltd from Nigeria, Sinopec from China, Petrichor Capital from Malaysia, Vitol Group from Singapore, Martin Tejarat from Iran, Dandeniya Engineering Sales and Service Syndicate, a local-based company and Sri Lanka’s Harree Management with UAE’s Marka Invest submitted their expression of interest early this year.