Hambantota oil refinery in keeping with BOI process - Deputy Minister Bandara | Sunday Observer

Hambantota oil refinery in keeping with BOI process - Deputy Minister Bandara

In the wake of numerous accusations on the proposed oil refinery plant in Mirijjawila, Hambantota, the Deputy Minister of International Trade and Development Strategies, Nalin Bandara denied all such allegations at a special media briefing at the Information Department, last week.

The Deputy Minister accused the opposition MPs of making false allegations with the idea of misleading the public. “The Opposition tries to mislead the public saying that we are initiating fake projects. They keep boasting about some projects done during the last regime which were completed seven or eight years later. Our Government has just completed four years. But I challenge the Opposition to name any industry they created during their rule. During the Rajapaksa regime, no industry was started,” he said.

He explained the BOI process followed in granting approval for the Hambantota oil refinery project thus: “On November 10, 2016, this foreign investor, submitted the application to the Sri Lanka Board of Investment and the Letter of Approval was issued on November 16, 2016. In November 2017, they increased the investment to US$ 3.85 billion from the original figure which was stated as US$ 2 billion.

Accordingly, they submitted a fresh application as per the new investment value. In January 2018, the Cabinet Committee on Economic Management (CCEM) decided to release lands to the investor and presented the proposal to the Cabinet on April 25, 2018. That is the process followed in granting this project to Silver Park Oil Refineries Pvt Limited.” The oil refinery which could be the largest single foreign direct investment in the history of the country is to operate as a 70:30 joint venture between Silver Park International in Singapore and Oman government-owned Oman Oil and Gas company.

Silver Park International’s parent company is the ‘Accord group of companies’ in India, one of the largest conglomerates in the neighbouring country. “There might have been allegations against people in Accord, but no charge had been proved yet,” the Deputy Minister said.

He said, Silver Park Oil Refineries Pvt Ltd. has already begun the investment, paying US$ 400,000 to BOI which is equivalent to 10 per cent of the lease rental. Investment agreement has been signed and once the lease agreement is signed following approval of the legal department of BOI, the investor has to pay US$ 3.6 million as per the agreement.

“They have chosen Oman Oil and Gas Company as their strategic partner, as it is the main supplier of crude oil to the refinery,” the Deputy Minister said.

He said, “we are considering the possibility of having a share of this investment to the Ceylon Petroleum Corporation (CPC) too”.

The company aims at producing 200,000 barrels per day, with the proposed refinery where all products will be export-oriented. In addition to natural products of crude oil such as petrol, diesel and aircraft fuel, it will produce fertilizer and Petro-chemicals as by-products. Also, 6,000 job opportunities are to be created through the oil refinery and a cement factory in the Mirijjawila export processing zone.

When the Sunday Observer, raised questions on the possible threat of a money laundering attempt with this investment and Sri Lanka being pushed to the blacklist of the Global Financial Action Task Force, as claimed by Transparency International, the Deputy Minister denied such threats.

“We do all financial transactions according to Central Bank regulations. We have received information about this Indian company which is one of the largest companies in India.

Anyone can suspect, but we have proceeded in a transparent manner,” he said.

He said, this investment and the Singapore- Sri Lanka Free Trade Agreement have no connections. “There is no benefit to that company by Singapore Sri Lanka Free Trade Agreement. We provide BOI tax concessions despite the origin of the investor.

However, we always sign agreements with a Sri Lankan company. Even here, Silver Park International formed a Sri Lankan company as Silver Park Refineries Pvt.Ltd. and BOI entered into agreement with that Sri Lankan company” he said.

The construction of the project will be completed in 48 months, the Deputy Minister said. Once it starts operations an additional US$ 7 billion will be added to Sri Lanka’s annual export earnings.

It would be a huge revolution in the export earning sector as Sri Lanka currently receives only about US$ 17 billion from all other export earnings.