Cash-strapped On Tuesday, Sri Lanka announced that it was abandoning a $3.85 billion agreement to construct an oil refinery, which was slated to be the largest foreign investment ever made in the country.
The deal was cancelled on Monday, according to Energy Minister Kanchana Wijesekera, because Singapore-registered Silver Park International has not started construction since a ground-breaking ceremony in 2019.
Originally, Silver Park, an Indian family business, and Oman were going to fund the project equally, and it was supposed to be finished this year.
According to Wijesekera, the government would look for a different foreign partner to establish a refinery that will be used largely to export petroleum products.
According to him, China’s Sinopec and Vitol had been shortlisted to build the island’s second oil refinery close to the Chinese-run southern port of Hambantota.
Within weeks, a new partner would be revealed.
“The cabinet cancelled the agreement with (Silver Park’s) Hambantota Refinery Company because they did not proceed with the construction,” Wijesekera said.
He said that over 1,200 acres (485 hectares) of land earmarked for the refinery were reclaimed.
Sri Lanka’s prime minister at the time of the groundbreaking ceremony in November 2019 was President Ranil Wickremesinghe.
In Hambantota, a deep sea port close to congested shipping channels between Asia and Europe, Wickremesinghe had hoped the refinery would draw more investment to the region.
In 2017, the port was controversially leased to a state-owned Chinese corporation for $1.12 billion for a 99-year period; Sri Lanka paid a Chinese company $1.4 billion to build the port.
In April 2022, Sri Lanka missed payments on its $46 billion external debt due to a lack of foreign currency needed to pay for necessities including food, petrol, and medications.
Since then, it has obtained a rescue from the IMF worth $2.9 billion.
