-By Economic Affairs Correspondent
(Lanka-e-News - 16.Oct.2025, 10.45 PM) In a major step towards reviving Sri Lanka’s position as a regional energy and logistics hub, Chinese energy conglomerate Sinopec has pledged to accelerate the long-delayed $3.7 billion Hambantota oil refinery project, one of the largest foreign direct investments in the island’s history.
The commitment came following high-level talks in Colombo between Sinopec Vice Chairman Liu Liangong and Minister of Foreign Affairs, Foreign Employment and Tourism Vijitha Herath, where both parties agreed to “commence work immediately” after years of bureaucratic stagnation and uncertainty.
The Sinopec-led project is poised to be Beijing’s most significant energy infrastructure investment in South Asia, designed to strengthen Sri Lanka’s fuel security, boost refined oil exports, and create thousands of jobs. Once operational, the refinery is expected to process up to 200,000 barrels of oil per day, transforming the southern port city of Hambantota into a regional refining and distribution centre.
A high-level Sinopec delegation of ten senior officials, led by Vice Chairman Liu, met Minister Herath on Wednesday to discuss progress on the project and to resolve lingering procedural issues that have delayed implementation since the proposal was first announced in 2019.
Vice Chairman Liu praised the Sri Lankan government’s “proactive engagement” in resolving key obstacles that had hindered the project, expressing gratitude for Minister Herath’s personal involvement in moving it forward.
“The Hambantota refinery is not merely a commercial investment,” Mr Liu said during the meeting. “It represents a long-term partnership that will strengthen Sri Lanka’s energy security, generate employment, and contribute to industrial transformation.”
Minister Herath, who now oversees both foreign investment coordination and tourism promotion under his expanded portfolio, described Sinopec’s renewed commitment as “a clear signal that Sri Lanka is once again open for business.”
“Projects of this scale send the right message to global investors,” he said. “They demonstrate that Sri Lanka is rebuilding with transparency, efficiency, and determination. Foreign investments like Sinopec’s will be vital to our economic recovery.”
The minister assured the delegation that all remaining administrative and regulatory issues — including land allocation, customs clearance, and infrastructure access — would be resolved “without further delay.” He also confirmed that the Board of Investment (BOI) had already granted the refinery national priority status, ensuring accelerated approval procedures.
After years of uncertainty, the formal project agreement was signed in January 2025, marking a breakthrough following prolonged negotiations over shareholding structures, export guarantees, and regulatory terms.
The refinery will be strategically located adjacent to the Chinese-operated Hambantota Port, giving it direct access to maritime routes connecting South Asia, East Africa, and the Middle East. The site’s proximity to deep-water facilities is expected to reduce logistics costs and enable Sri Lanka to re-export refined fuel across the region.
The facility will also feature an integrated petrochemical complex, crude oil storage terminal, and pipeline connectivity to the port’s existing infrastructure — enhancing Sri Lanka’s capacity to handle large-scale energy trade.
Construction of the Hambantota refinery is projected to create more than 3,000 direct jobs and 15,000 indirect employment opportunities, particularly in southern Sri Lanka, where industrial development has lagged behind the western region.
Sinopec has also committed to launching a vocational training programme in partnership with local technical colleges, focusing on refinery operations, logistics, and safety standards.
“Our investment will not only create jobs,” a senior Sinopec official said, “but also transfer knowledge and technical expertise to Sri Lankan engineers and technicians, ensuring long-term sustainability of the country’s energy sector.”
The refinery’s completion will significantly reduce Sri Lanka’s dependence on imported refined fuels, saving an estimated USD 500 million annually in foreign exchange. Officials say that once operational, the facility could even make Sri Lanka a net exporter of petroleum products within the region.
For Sri Lanka, the renewed momentum around the Hambantota project represents more than an infrastructure milestone. It is also a vote of confidence from one of the world’s largest energy corporations, coming at a time when the island is emerging from its most severe economic crisis in decades.
The government, under IMF supervision, has been working to restore investor trust through fiscal consolidation, debt restructuring, and a new investment promotion framework aimed at cutting red tape and improving ease of doing business.
Diplomatic observers view Sinopec’s re-engagement as strategically significant within China’s broader Belt and Road Initiative (BRI). Sri Lankan officials insist that the project is structured as equity-based foreign direct investment, not a loan, which will boost the International Investor confidence in Sri Lanka.
The Sinopec delegation is scheduled to meet with the Ministry of Power and Energy, the Board of Investment, and senior officials from the Central Environmental Authority this week to finalise regulatory and technical arrangements.
Construction is expected to begin before mid-2026, with commercial operations projected to start within four years of groundbreaking.
For now, the renewed partnership between Colombo and Beijing signals a pragmatic shift — one that merges economic necessity with strategic opportunity. If delivered as promised, the Hambantota refinery could redefine Sri Lanka’s role in the region’s energy map and mark a decisive step toward economic self-reliance.
-By Economic Affairs Correspondent
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by (2025-10-16 17:16:53)
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