The government has not made a decision to give permission to Sinopec to build an oil refinery in Hambantota

The Sri Lankan government has not yet reached a final decision regarding the proposed US$3.7 billion oil refinery investment by Chinese state giant Sinopec. It is stated that this situation has arisen due to disagreements over the terms and conditions of the project, despite more than a year and a half having passed since the signing of the Memorandum of Understanding (MoU).

The relevant company obtained preliminary approval in 2023 to establish an oil refinery in the Hambantota area. The Memorandum of Understanding (MoU) for this project, considered Sri Lanka's largest Foreign Direct Investment (FDI), was signed during President Anura Kumara Dissanayake's second official visit to Sinopec in January 2025, after he assumed power in September 2024. If this project is implemented, it will have the capacity to refine 200,000 barrels of crude oil per day.

According to the original agreement, Sri Lanka had agreed to sell 20 percent of the refined product to the domestic market and export the remaining amount. However, the company has now requested amendments to the original agreement with the aim of gaining further access to the domestic market. According to a high-level government source, the government faces certain limitations in providing special concessions for only one specific project, as the International Monetary Fund (IMF) program expects a competitive environment with equal opportunities for all.

This project was also discussed during a previous meeting between Chinese Foreign Minister Wang Yi and Sri Lankan Foreign Minister Vijitha Herath. During that meeting, Minister Vijitha Herath stated that the agreement related to the Hambantota project is expected to be finalized within the first quarter of 2026. However, government sources further confirm that there is no possibility of this project commencing in the near future, as issues regarding the project's terms and conditions have not yet been resolved.