Sri Lanka has achieved a major milestone by securing its largest-ever foreign investment. Chinese oil giant Sinopec will invest a massive $3.7 billion to build an advanced oil refinery in the southern Hambantota region, according to official announcements made on Thursday.
The state-of-the-art facility will have the capacity to process 200,000 barrels of oil per day. A significant portion of this output is planned for export, aiming to boost the country’s foreign exchange earnings. This major investment is expected to not only strengthen Sri Lanka’s economy but also uplift low-income communities in the Hambantota area by creating job opportunities and improving livelihoods.
This deal was finalized during President Anura Kumara Dissanayake’s recent four-day visit to China. It marks a turning point for Sri Lanka, which has faced severe economic challenges in recent years. The president described the investment as a “significant step” in restoring the country’s financial stability and economic growth.
Hambantota, known for its strategic location on one of the world’s busiest shipping routes, has been a focal point for international investments. In 2017, Sri Lanka leased the Hambantota Port to a Chinese company for $1.12 billion after struggling to repay large Chinese loans. While the decision sparked controversy, it highlighted the country’s reliance on foreign investments for economic recovery.
Sri Lanka’s financial difficulties peaked in 2022 when the country defaulted on its foreign debt, leading to shortages of essential goods such as food, fuel, and medicine. At the time, China held more than half of Sri Lanka’s bilateral debt, further emphasizing Beijing’s influence in the region.
President Dissanayake, who took office in September after a landslide parliamentary victory, has prioritized rebuilding the nation’s economy. His visit to China follows his red-carpet welcome in India, where he met Indian Prime Minister Narendra Modi during his first official trip as premier in December.
Chinese President Xi Jinping, during his meeting with Dissanayake, emphasized the importance of strategic cooperation between the two nations. He expressed optimism about building a “shared future” through stronger ties and collaborative projects like the Hambantota refinery.
The refinery project has a long history. It was initially awarded to an Indian company in 2019 but was later canceled due to delays. Sinopec emerged as the new investor after securing the contract in 2023.
This investment is expected to significantly enhance Sri Lanka’s position on the global economic map while contributing to the country’s long-term stability and growth. The Hambantota refinery will not only support the nation’s energy needs but also play a key role in attracting further investments to Sri Lanka’s strategically located maritime assets.
This development underscores Sri Lanka’s efforts to rebuild its economy with support from global partners, paving the way for a brighter future.
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