The Chinese stranglehold over Sri Lanka refuses to weaken. After keeping quiet during last year’s massive public unrest over the collapsed economy and its slow and painful recovery, China is once again flexing the muscle in the Island nation.
A petroleum refinery project at geo-strategic and sensitive southern port city in the Rajapaksa family stronghold of Hambantota has gone to China.
According to a report in leading English newspaper ‘Daily Mirror’, China’s Sinopec will make an initial investment of US $1.5 billion, the single largest foreign direct investment (FDI), in building a refinery in Hambantota once the agreement is finalised within the next two weeks, a top source said.
It remained a foregone conclusion in political circles that the company would be awarded the project, though the government says it is open to any firm participating in the competitive bidding process.
Previously, Colombo Port City, another Chinese investment, remained the largest FDI project in Sri Lanka. The source said though Sinopec will make an investment of $1.5 billion, more money will come in later in other related developments of the refinery.
Hambantota is a deep-sea port constructed during the time of former President Mahinda Rajapaksa with financial assistance from China. However, the port was leased to Chinese state-owned firm ‘China Merchants ‘in 2017 for 99 years for US$ 1.12 billion.
During his recent visit to China, President Ranil Wickremesinghe held talks with Sinopec Group chairman Ma Yongsheng and top executives in Beijing last week. Sinopec has already entered Sri Lanka’s retail fuel market.
Sinopec secured the project since the only other contender to the project, Vitol Singapore, withdrew from the race.
Meanwhile, the operations of two other foreign fuel companies — the US-based RM Parks and United Petroleum Australia—will be delayed. RM-Parks has deposited the performance bond though.
“We have placed a condition that they cannot remit their profits from fuel trading technically for two years after the arrival of each shipment. Therefore, it becomes a huge initial investment for them; they need time,” the source said.
India, the closet neighbour and trade partner of Sri Lanka has bailed out the bankrupt island nation after pumping over US $6 billion in the last 18 months. The public mood across Sri Lanka is in favour of India and against China.
India’s Adani Group is investing a few billion dollars in a renewable energy and port project in Sri Lanka.
Many people believe that Sri Lanka should not fall into a dragon trap once again. But the cash-strapped government says time is running out and it is not in a position to wait and bargain with others.
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