China’s Sinopec has pledged to invest in Sri Lanka’s southern district of Hambantota at a meeting with the island nation’s president, Ranil Wickremesinghe, the President’s Media Division (PMD) said, Economy Next reported.
The move comes as Beijing seeks to consolidate investments in the island nation’s ports and energy sector amid increasing security concerns raised by the island nation’s immediate neighbours India and the United States. Wickremesinghe under the previous government has leased the USD 1.5 billion port built by Beijing to state-owned Chinese firms on a 99-year lease. China’s plans to establish a 15,00o-acre industrial zone around the port have yet to materialize, Economy Next reported.
The PMD said a discussion took place between the representatives of the Sinopec Group and President Wickremesinghe on Monday.
“President Ranil Wickremesinghe said that the government has taken a principled decision to expand the distribution of fuel & Hambantota has been identified as a primary energy hub,” the PMD said in a statement.
“Sinopec has also pledged to invest in a refinery in Hambantota.”
Sri Lanka has urged India to develop the energy hub of South Asia in the Eastern port district of Trincomalee. The state-run India Oil Corporation (IOC) has already signed a joint venture with the state-owned Ceylon Petroleum Corporation (CPC) to develop the island nation’s only oil tank farm in Trincomalee, Economy Next reported.
The meeting with the Sinopec officials comes 10 days after President Wickremesinghe directed the petroleum minister and officials to swiftly carry out a plan to revive the Trincomalee oil tank farm and incorporate it into the country’s economy after an inspection tour of the Lanka Indian Oil Company (LIOC) oil tank farm in Trincomalee.
Sinopec, also known as China Petrochemical Corporation, is the world’s largest refining company and the third-largest chemical company. It is the largest oil and petrochemical products supplier and the second-largest oil and gas producer in China, Economy Next reported.
Its total number of gas stations ranks second place in the world. It ranked 5th on Fortune’s Global 500 List in 2021.
China’s aggressive lending to Sri Lanka along with investments of billions of dollars has raised concerns about a plan to establish a military base in Hambantota, Economy Next reported.
Beijing has denied such a plan and said its move with Colombo has been always commercial.
The West led by the US has blamed China’s aggressive lending as a “debt trap” which has led Sri Lanka to face an unprecedented economic crisis amid sovereign debt default. However, both China and Sri Lanka have denied the “debt trap” accusation.
China, instead, had blamed Sri Lanka’s sovereign borrowing, which was mostly from Western countries, as the debt trap and reason for the crisis.