The Sinopec refinery project in Hambantota faces further delays as Sri Lanka and the Chinese company remain divided over key investment conditions.
The Sinopec refinery project in Hambantota is facing further uncertainty as disagreements continue over key conditions attached to the proposed US$3.7 billion investment, the Daily Mirror reports.
More than one and a half years have passed since the Memorandum of Understanding was signed. However, the government has still not reached a final decision on commencing the project.
The development, described as the largest Foreign Direct Investment Sri Lanka has ever received, gained preliminary approval in 2023. Subsequently, the parties signed the project MoU during President Anura Kumara Dissanayake’s official visit to China in January 2025.
The proposed Sinopec refinery project will have a production capacity of 200,000 barrels per day.
Under the initial agreement, Sinopec would release 20 percent of the refinery’s production to the Sri Lankan domestic market. The company would export the remaining 80 percent.
However, Sinopec is now seeking greater access to the domestic market. For this purpose, the Chinese company wants amendments to the conditions contained in the original agreement.
A senior government spokesperson said Sri Lanka must provide equal opportunities to all investors under its program with the International Monetary Fund. This requirement limits the government’s ability to grant special tax concessions or other privileges to a single project.
As a result, resolving the outstanding disagreements surrounding the investment has become difficult.
Foreign Minister Vijitha Herath previously said he expected the government to finalize the agreement by the first quarter of 2026.
However, given the continuing disagreements over the project’s conditions, reports indicate that the likelihood of the Sinopec refinery project commencing in the near future remains very low.
