India’s Accord Group, Oman Group sign deal to build oil refinery in Sri Lanka

New Delhi: India’s Accord Group and Oman’s Ministry of Oil and Gas have signed an agreement worth US$ 3.85 billion to develop a 2,00,000 barrel-per-day oil refinery in Sri Lanka, the largest single foreign direct investment deal ever made in the island nation. The deal signifies a challenge to China, which was recently on course to becoming the dominant overseas investor in the country, and a possible triumph for India.

New Delhi has been worried about China’s dominance in Sri Lanka and other regional countries in the past few years, where India has been the traditional power. The refinery will be developed on 585 acres near the new Hambantota international port site and a related industrial zone on Sri Lanka’s southern coast, officials from the country said.

The refinery’s construction is likely to start from March 24 and is set to be completed in 44 months. It is set to generate 9 million metric tonnes of refined products a year for export from the Hambantota port, which serves the busiest East-West shipping route.

Accord to control 70% of JV

Privately-run Accord Group will take own 70 percent of the joint venture while the Sultanate of Oman’s Ministry of Oil and Gas will control the remaining.

Sri Lanka’s exports to grow

“With this refinery, our exports will grow by $7 billion per year,” Nalin Bandara Jayamaha, Sri Lanka’s deputy minister of development strategies and international trade, said.

The joint venture will invest US$1.96 billion through loans and US$ 1.89 billion in share capital.