Sinopec, CMPort to Ink Deal for Sri Lanka Bunkering: State Media

China Merchants Port Holdings Co. Ltd. (CMPort) and China Petroleum & Chemical Corp. (Sinopec) are set to sign an agreement to establish bunkering operations in Sri Lanka, following the country's opening of its fuel market to multinationals, government newspaper Daily News reported Monday.

"This development comes after Power and Energy Minister Kanchana Wijesekera announced that the Cabinet of Ministers has granted approval for allowing China’s Sinopec, Australia’s United Petroleum and RM Parks of the USA, in collaboration with multinational Oil and Gas Company – Shell plc, to enter the fuel retail market in Sri Lanka", the newspaper said. 

Wijesekera tweeted April 5 the cabinet has granted licenses to the three to operate 150 dealer-operated fuel stations of Ceylon Petroleum Corp each.

President Ranil Wickremesinghe had met with Sinopec representatives about plans to expand the nation's fuel distribution network.

"The representatives from the Sinopec Group confirmed their readiness to invest in the import, storage, distribution, and marketing of fuel to cater to Sri Lanka’s energy requirements", the President's Media Division said in a press release March 13.

Sinopec already has a bunkering business in Sri Lanka. The Chinese state-owned company started operation at its oil depot at the Hambantota Port in 2020, Sinopec said in a press release April 9, 2020.

Daily News did not say more about the planned deal between CMPort and Sinopec.

The purported agreement comes amid efforts by debt-ridden Sri Lanka to be a trading transit in the Indian Ocean, where it plans to be a "financial, maritime and services transitory point" by 2030, as stated in its development plan for the decade.

Wickremesinghe affirmed that goal at a Colombo forum Friday.

"Addressing the 30 year development plan of the Colombo North Port workshop, on Friday (21) in Colombo, President Ranil Wickremesinghe emphasized that the government’s intention is to make Sri Lanka an air and sea hub in the region", his office said.

Sri Lanka is looking at China's "Belt and Road" global infrastructure project to promote its trading position, while also seeking to leverage its economic cooperation with India.

The Belt and Road "will witness a large increase in the volume of trade between China and Pakistan. Sri Lanka must look to take advantage of these shifting trade patterns to increase its own trade in the region. However, this must not be to the detriment of trade between India and Sri Lanka", stated Sri Lanka's 2030 vision published January 2019.

On Friday in another Sri Lankan-Chinese partnership, CMPort said it has entered a pact with the Sri Lanka Ports Authority (SLPA) to construct a regional logistics facility in the South Asian country.

The shareholders agreement also involving Access Engineering PLC provides for $84 million in share capital for the creation of a company for the South Asia Commercial Hub and Logistics Hub Project, the Hong Kong-based company announced on its website. The joint venture will get 70 percent of the capital, $58.8 million in cash, from CMPort wholly-owned subsidiary FCGL. Access Engineering and the 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-transfer deal with the SLPA on the same day for the project in the Colombo Port.

"The project is expected to comprise 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 container loads (LCL) operations; (2) multi-country consolidation (MCC) operations; (3) bonded warehousing services; (4) container freight station (CFS) facilities; (5) freeport/hub operations and (6) office space, among other services and facilities", the announcement stated.

The project is estimated to cost about $392 million. 

CMPort, which describes itself as "the largest and a globally competitive public port developer, investor and operator in China", already has an operational project in Sri Lanka. It owns 85 percent of the deepwater free port CICT, while the SLPA holds the remaining 15 percent. CICT started operation 2013, CMPort says on its website.

"Having already established a story of success in the Port of Colombo through the development of the CICT, the SACLH Project... will be beneficial to the Company in expanding its share in the South Asian ports market, while increasing its revenue and profit", it said in Friday's announcement.

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