Sri Lanka begins construction of $3.85 billion oil refinery backed by Indian firm, Oman

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Published: March 24, 2019 6:31:15 PM

The USD 3.85 billion project is the single largest foreign direct investment in the island nation's history.

The refinery project is expected to complete in four years (Representational Image)

Sri Lanka on Sunday began construction of a USD 3.85 billion oil refinery next to a Chinese-run port as part of a joint venture between India’s Accord Group and Oman’s oil ministry, the island nation’s biggest foreign direct investment ever. Prime Minister Ranil Wickremesinghe, whose 70th birthday coincided with the ground-breaking ceremony, said that with investments coming from India, China and Oman, Hambantota is set to become a multinational investment zone.

Oman and Sri Lanka have centuries-old relationships, Oman’s Oil and Gas Minister Mohammed Hamad Al Rumhy said at the ceremony. The USD 3.85 billion project is the single largest foreign direct investment in the island nation’s history.

The refinery project, expected to complete in four years, came under criticism last week when a media report claimed that the government of Oman had rejected any knowledge of the project. China has acquired the Hambantota port for a 99-year lease as a debt swap.

Beijing on Thursday said that it is “not narrow minded” to oppose the Indian investments in Sri Lanka, as it reacted guardedly to the USD 3.85 billion joint venture between India’s Accord Group and Oman’s oil ministry.

Chinese investments over the years in Sri Lanka amounted to over USD eight billion adding pressure to Colombo’s external debt burden. China’s acquisition of Hambantota port as a debt swap has raised concerns about Beijing’s Belt and Road Initiative (BRI), which US has cautioned as debt trap specially for smaller countries.

The Belt and Road Initiative is a multi-billion-dollar initiative launched by Chinese President Xi Jinping when he came to power in 2013. It aims to link Southeast Asia, Central Asia, the Gulf region, Africa and Europe with a network of land and sea route.

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