China Merchants Port Holdings Co. Ltd. (CMPort) and China Petroleum & Chemical Corp. (Sinopec) will sign an agreement to set up bunkering operations in Sri Lanka, following the opening of its fuel market to multinationals, the government newspaper Daily News reported on Monday.
“This development comes after Power and Energy Minister Kanchana Wijesekera announced that the Cabinet has approved allowing China’s Sinopec, Australia’s United Petroleum and US’s RM Parks, in partnership with the multinational Oil and Gas Company – Shell plc, may enter the retail fuel market in Sri Lanka,” the newspaper said.
Wijesekera tweeted on April 5 that Cabinet has granted licenses to the three to operate 150 Ceylon Petroleum Corp service stations each.
President Ranil Wickremesinghe had met with Sinopec representatives over plans to expand the country’s fuel distribution network.
“Representatives of the Sinopec Group confirmed their readiness to invest in the import, storage, distribution and marketing of fuel to meet Sri Lanka’s energy needs,” the President’s Media Division said in a press release on 13 March.
Sinopec already has a bunkering business in Sri Lanka. The Chinese state-owned company began operations at its oil depot at the port of Hambantota in 2020, Sinopec said in a press release on April 9, 2020.
The Daily News did not say more about the planned deal between CMPort and Sinopec.
The alleged deal comes amid debt-ridden Sri Lanka’s efforts to become a commercial gateway to the Indian Ocean, where it plans to be a “financial, maritime and services transit point” by 2030, as stated in the its development plan for the decade.
Wickremesinghe stated this goal at a forum in Colombo on Friday.
“Addressing the 30-year development plan of the Colombo North Port Workshop, Friday (21) in Colombo, President Ranil Wickremesinghe emphasized that the government’s intention is to make Sri Lanka an air and maritime hub in the region” , his office said.
Sri Lanka is looking at China’s “Belt and Road” global infrastructure project to promote its trade position, while seeking to leverage its economic cooperation with India.
The Belt and Road “will see a huge increase in the volume of trade between China and Pakistan. Sri Lanka must look to take advantage of these changing trade patterns to increase its own trade in the region. However, this has not to the detriment of trade between India and Sri Lanka,” declared Sri Lanka’s Vision 2030 released in January 2019.
On Friday, in another partnership between Sri Lanka and China, CMPort said it has signed a pact with the Sri Lanka Ports Authority (SLPA) to build a regional logistics facility in the South Asian country.
The shareholder agreement, which also involves Access Engineering PLC, provides for $84 million in share capital for the creation of a company for the South Asia trade and logistics concentration project, the company announced in Hong Kong on their website. The joint venture will obtain 70 percent equity, $58.8 million in cash, from CMPort’s wholly-owned subsidiary FCGL. Access Engineering and SLPA have agreed to contribute $12.6 million in cash each, or a total of 30 percent.
CMPort said it had signed a 50-year build, operate and transfer agreement with the SLPA on the same day for the project at Colombo Port.
“The project is expected to include the construction of a minimum of a 5-story warehouse logistics facility with a total gross floor area of approximately 466,000 square meters in two phases, covering (1) less than the operations container load (LCL); (2); ) multinational consolidation operations (MCC); (3) customs warehousing services; (4) container loading station (CFS) facilities; (5 ) freeport/hub operations and (6) office space, among other services and facilities.” communicated
The project is estimated to cost about $392 million.
CMPort, which describes itself as “the world’s largest and most competitive public port developer, investor and operator in China”, already has an operational project in Sri Lanka. It owns 85 percent of the deep water free port CICT, while the SLPA holds the remaining 15 percent. CICT began operations in 2013, CMPort says on its website.
“Having already established a success story at the Port of Colombo through the development of the CICT, the SACLH Project… will be beneficial to the company in expanding its share of the port market of South Asia, while increasing its revenues and profits,” he said in Friday’s announcement.
To contact the author, please email jov.onsat@rigzone.com
