Sri Lanka (Common Wealth) _ According to Sri Lanka’s electricity minister, Kanchana Wijesekera, Chinese oil firm Sinopec aims to begin operations in Sri Lanka on September 20 and will be allowed to sell petrol at prices lower than the government’s maximum retail price.
The introduction of Sinopec into Sri Lanka would assist ease strain on the country’s foreign exchange reserves, and the island nation expects two other multinational gasoline operators to begin operations in October and November, according to Wijesekera.
With Sinopec’s admission, the government would be able to expand fuel imports and bolster the economy, said Minister Wijesekera.
RM Parks Inc. of the United States and United Petroleum Pty. Ltd. of Australia, in addition to the Chinese global energy behemoth, have won government authorization to enter Sri Lanka’s retail gasoline sector. The new entrants will break the market duopoly held by the state-run Ceylon Petroleum Corp and Lanka IOC, a unit of Indian Oil Corp.
The Chinese company will be granted a 20-year license to operate 150 petrol stations as well as the ability to invest in 50 new fuel stations under the new agreement. Sri Lanka is experiencing its biggest financial crisis since gaining independence from the British in 1948, with reserves standing at US$3.8 billion at the end of July.
Last year, the island’s economy was severely harmed by spiraling energy costs exacerbated by the Ukraine crisis, which generated long lineups at gas stations and hours-long power outages. Sinopec and Vitol have also been shortlisted for a refinery project in southern Sri Lanka, and their request for proposals is expected to be handed over by the end of August, according to Wijesekera.
The refinery project, which is projected to cost up to $4 billion, has been in the works since 2019. According to State Minister Dilum Amunugama, Sinopec, China’s top international petroleum business, would begin operations in the country as an importer, distributor, and retail operator for petroleum goods.
Sinopec Energy Lanka (Pvt) Limited, the Beijing-based company’s affiliate in Sri Lanka, signed a deal with the Board of Investment (BOI) to operate and establish filling stations for petroleum distribution on the island nation.
Sinopec has committed USD 100 million in the project, which comprises fuel importation, storage, and distribution. According to the Sri Lanka BOI Act No. 17, the Sinopec and the BOI agreement authorizes the project to operate for 20 years under the supervision of Sinopec Energy Lanka.
Sinopec will sell a variety of petroleum products, including 92 and 95 Octane Petrol, 500 PPM Diesel, Diesel 10 COPPM, and other diesel and petroleum products.
Sinopec is the world’s largest supplier of oil and petrochemical goods, the second-largest oil and gas producer, the largest refining corporation, and the third-largest chemical company. It has the second-highest number of petrol stations in the world. In 2021, it was placed fifth on Fortune’s Global 500 List.
This result provides optimism for a more steady and consistent fuel supply, increasing the country’s energy sector and providing consumers with assurance, according to the statement.
According to the office, the agreement stemmed from the energy ministry’s efforts to assure domestic supply amid the debt-ridden country’s foreign exchange crisis, which has hurt regular suppliers Ceylon Petroleum Corp. and Lanka Indian Oil Co.
According to the report, one of the primary requirements for new retail suppliers entering the market was the capacity to acquire currency requirements without relying on the domestic banking system. It was mandated that these enterprises obtain their own funding for fuel acquisition from foreign sources, at least for the first year of existence.
