Chinese companies enter the fuel market in Sri Lanka," India's "Economic Times" reported on the 22nd that Sri Lanka, which is short of funds, signed an agreement on Monday to allow a Chinese company to enter the country's fuel market. This means that Chinese companies will cooperate locally An Indian oil company competes with the state oil company of Sri Lanka, which imposed fuel rationing for months last year as a foreign exchange crisis blocked imports.
According to the Chinese Embassy in Sri Lanka, on the morning of May 22, under the witness of Sri Lankan President Wickremesinghe, representatives of China and Sri Lanka signed a 20-year agreement for Sinopec to carry out import, storage, distribution and sales of petroleum products in Sri Lanka at the Presidential Palace. With the long-term contract, Sinopec officially obtained the franchise rights of 150 existing gas stations in Sri Lanka and the development rights of 50 new gas stations in the future.
According to a press release from the Sri Lankan Presidential Palace, the signing of this agreement with Sinopec is an important measure for Sri Lanka to meet the challenge of fuel supply, and it marks a key step taken by the Sri Lankan government to ensure the country's stable and uninterrupted fuel supply.
According to Sri Lanka’s “Daily Mirror” report, prior to this, Sri Lanka’s oil supply was mainly in the charge of Ceylon Petroleum Corporation (CPC) and Sri Lanka Indian Oil Corporation (LIOC), accounting for 90% and 10% respectively. It is understood that Indian Oil Corporation is the first foreign operator allowed to enter the market since Sri Lanka nationalized the oil company 60 years ago.
According to reports, China and Sri Lanka began negotiations a few months ago. On April 26, a Sinopec delegation visited Sri Lanka to finalize the agreement. Back in March, Sri Lanka approved a proposal to allow more companies from China, Australia and the US to enter the country's fuel retail market. Petroleum Ceylon will provide 150 petrol stations for use by the new foreign fuel service operator.
This move has aroused strong concern in India. The Times of India, The Economic Times of India and other media reported that Sri Lanka allowed Chinese oil companies to enter the country’s fuel market and compete with CPC and LIOC. This decision may end the 20-year duopoly of the two in Sri Lanka pattern.