One year after a high-profile agreement signed in Beijing, Sri Lanka’s largest foreign investment remains stalled, with policy delays and unanswered questions clouding a flagship energy project.
Nearly one year after Sri Lanka signed its largest ever foreign direct investment agreement, the proposed US $3.7 billion Sinopec refinery project has yet to move from promise to execution.
In January 2025, during President Anura Kumara Dissanayake’s official visit to China, the Sri Lankan government entered into a Memorandum of Understanding with China Petrochemical Corporation, commonly known as Sinopec. The agreement aimed to expedite the construction of a modern oil refinery within the investment zone near the Hambantota International Port. At the time, the project was presented as a cornerstone of Sri Lanka’s post-crisis economic recovery and energy security strategy.
The MoU signed during that visit marked the single largest investment commitment in Sri Lanka’s history. Once constructed, the refinery, which had originally received approval in 2023, is expected to process up to 200,000 barrels of crude oil per day, significantly strengthening domestic refining capacity and reducing dependence on imports.
However, progress has slowed since the agreement was signed. Sinopec has subsequently requested amendments to the original terms, including provisions that would allow increased access to the local fuel market. Discussions between the government and the company on these proposed changes are still ongoing.
When asked about the current status of the project, an official familiar with the matter, who requested anonymity, said that the final decision is expected to be taken by the Cabinet in the near future. However, the official added that it is not possible to set a definitive timeline at this stage.
Sri Lanka has already opened its energy sector to foreign participation. At present, Lanka IOC, Sinopec, and RM Parks of the United States are operating within the sector. In parallel, Sri Lanka is also seeking closer cooperation with India to develop Trincomalee as a regional energy hub.
As months pass and expectations remain high, attention is now focused on the Cabinet’s next move and whether this long-awaited investment will finally see the light of day.
