LNP - Nine months on: US $3.7Bn Sinopec investment in limbo

Despite the lapse of nine months since the signing of the MoU, the government is yet to finalise the proposed US $3.7 billion investment by China’s Sinopec for a refinery facility in Hambantota, the Daily Mirror learns. The deal was inked during President Anura Kumara Dissanayake’s visit to China earlier this year. However, the project’s implementation has stalled, with the company seeking amendments to the original tender terms, including a greater share of access to the local market and a tax holiday. According to the present terms and conditions, Sinopec has been given 20 per cent of its output to be released to the local market. Sinopec is expected to produce 100,000 barrels per day initially, with plans to scale up output to 200,000 barrels once the full investment is realised. A portion of the output is earmarked for the local market, while the bulk will be exported. Government sources confirmed that negotiations are ongoing but stressed that Colombo has declined to alter the tender conditions. Additionally, offering a tax holiday has proved difficult due to commitments under the programme with the International Monetary Fund (IMF). The U.S. State Department, in its investment climate report on Sri Lanka, noted that the NPP government has publicly promoted its commitment to attracting inward investment. “In January 2025, President Dissanayake committed to finalising a $3.7 billion Sinopec oil refinery project, the largest FDI project in Sri Lankan history, to be located adjacent to the Chinese-controlled Hambantota International Port,” the report said. It added: “In February 2025, however, Indian firm Adani Green Energy withdrew from a proposed $400 million, 484 MW renewable energy wind farm project in northern Sri Lanka, citing Sri Lankan government efforts to renegotiate a previously awarded contract.”