China's oil giant Sinopec eyes business in Sri Lankan gas & energy market amid crisis

China's largest oil and energy corporation, Sipec, is looking at retail business opportunities in Sri Lankan fuel market as South Asian island continues to suffer a stifling ecomic crisis. According to local media reports, Beijing-based enterprise is hoping to enter Lankan petroleum market to import, sell and distribute products despite choppy fuel market on island.

This comes after newly-elected cabinet approved proposal forwarded by Lankan Power and Energy Minister Kanchana Wijesekera to allow more oil-producing nations to invest in retail operations in Sri Lanka.

What is Sipec?

Sipec Limited or China Petroleum & Chemical Corporation is largest energy, oil, and gas enterprise based in Beijing. It is under China's Petrochemical Corporation (SASAC), headed by Zhao Dhong. It is largest oil and petrochemical product supplier and second largest oil and gas producer in China. Sipec is also listed as largest refining company and third largest company globally to have incorporated in Sri Lanka, as per a Ministry of Foreign Affairs press release (2019). company already has invested in Lankan Hambantota port for which it had applied under BOI section 17 as Hub Operation. Furr, it also secured a bunkering license to carry out marine fuel supply business at said port from Q4 2019.

Sri Lanka unable to untangle itself from Beijing's 'debt trap': Report

According to Lankan national media Daily Mirror, added Chinese investments in form of business development comes at a time when Colombo is already reeling under Beijing's "debt trap" following years of reckless borrowing from China (and or nations as well.) Compounded with ill-timed taxes and pandemic-related drawbacks, island of 22 million people is currently facing a severe short of food, fuel, and or basic supplies. Long queues outside petrol pumps have become common view after country crept to edge of exhausting its reserves. In addition, prices of fuel have fluctuated massively subject to availability.

China being top creditor to Lanka, Colombo approached Beijing for a $1 billion loan to meet foreign debt obligations. In addition, Sri Lanka also requested a $1.5 billion credit line to purchase Chinese goods in order to mitigate acute shorts on island. Neverless, Lanka media reports claimed that China "turned a blind eye" to Colombo's calls, without any progress even after months of talks over requests.

Lankan ecomy is under sharp contraction as currency depreciated by at least 80% since March this year. Furr, with over $50 billion in foreign debt, country barely has basic imports for domestic production. Under current ecomic situation, at least 5.7 million people on island are in dire need of humanitarian assistance, said United Nations.

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