First batch of Chinese fuel arrives in Sri Lanka: Energy Minister Wijesekera

The first batch of fuel cargo from the Chinese energy company Sinopec arrived in Sri Lanka, Energy Minister Kanchana Wijesekera said on Tuesday, a development that will enhance the energy security of the debt-struck island nation amidst its worst financial crisis. Sri Lanka, facing its worst economic crisis in history due to a shortage of foreign exchange reserves, signed an agreement with Chinese oil giant Sinopec in May that allows the company to operate for the next 20 years to import, store, distribute and sell petroleum products in the island nation.

“The first fuel cargo of China Petroleum & Chemical Corporation (Sinopec) has commenced discharging, and the second cargo will arrive tomorrow,'' Wijesekera said.

The minister said the entry of new retail suppliers to the domestic market will ease the forex requirements for petroleum products.

He said the suppliers would bring in products on a 12-month financing facility from their principal investors with no forex requirements from the domestic financial institutes.

“45,000 metric tonnes of fuel, the first batch of Sinopec project, have been brought to Sri Lanka, which will enhance the energy security and ease the forex challenge of the island,” the Chinese embassy here said in a statement.

Sinopec's deal with the Sri Lankan Board of Investment ended the market duopoly between state-run Ceylon Petroleum Corp and the Indian Oil Company’s local operation LIOC.

The Chinese firm followed LIOC to become the third player in local fuel retailing operations with an investment of USD 100 million to import, store, and sell fuel.

It will take over 150 privately-owned fuel outlets currently managed by the state-owned Ceylon Petroleum Corporation and set up 50 new fuel stations.

Sri Lanka has signed agreements with Sinopec Fuel Oil Lanka (Pvt) Ltd and its parent company in China and Singapore.

The government announced in April that China’s Sinopec, United Petroleum of Australia, and RM Parks of the USA were slated to enter Sri Lanka’s retail market under a collaboration with Shell PLC.

They will operate in the island nation with licences valid for 20 years to import, store and distribute fuel.

Sinopec is recognised as the largest oil and petrochemical products supplier, the second-largest oil and gas producer in China, the largest refining company, and the third-largest chemical company globally.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)