The project has been funded by a Singapore-Oman joint venture near by a Chinese-controlled port.
Sri Lanka has reportedly begun construction of oil refinery worth $3.9 billion on Sunday. The project has been funded by a Singapore-Oman joint venture near by a Chinese-controlled port. This will be the largest foreign investment for Sri Lanka till date.
The tank farm and refinery will be built on 237 hectares (585 acres) of land which lies 235 kilometers south of Colombo, capital of Sri Lanka, near Chinese run port – Hambantota. The project is expected to be completed in 2023.
According to Fox Business, 200,000 barrels of production will be done by the refinery per day. This production will be mainly for export. However, Sri Lankan companies will be able to place orders for refined products to sell them locally.
Nalin Bandara, Sri Lanka’s Deputy Minister of International Trade, stated that the refinery will be jointly funded by the Sultanate of Oman’s Ministry of Oil and Gas and Singapore-based Silver Park International Private Limited. Silver park has 70 percent stake in joint venture and Oman controls the rest 30 percent, he added.
The investment has come as Sri Lanka struggles to repay foreign loans of $5.9 billion this year. 40% of the country’s total foreign loans of must be serviced by the end of this month. Sri Lanka has already used its reserved fund to repay a sovereign bond loan worth $1 billion in January.
Sri Lanka has much of its foreign debt from China including loans to build large infrastructure projects like highways and other projects. Some of them have become white elephants which has deepened the country’s debt trap.
in a bid to repay the burden of loan received to build the facility, Sri Lanka has leased the Chinese-built port – situated near the busiest east-west shipping route – for 99 years to a Chinese firm in 2017.
Sri Lanka is expecting its foreign earnings to rise by $7 billion after the refinery commences production.