Sri Lanka rejects Chinese request for local fuel sales
Sri Lanka has blocked a proposal by Chinese firms bidding to build the island's biggest oil refinery to sell fuel locally, fearing a threat to domestic firms that dominate the small but growing market.
The veto is the latest in a tussle over Chinese investments in Hambantota, a southern town near an important shipping route, where China controls the sea port and plans an industrial zone for Chinese firms and a $3 billion refinery with annual output of around 5 million tonnes.
China Huanqiu Contracting & Engineering Corp, a subsidiary of state-owned China National Petroleum Corp, and private refiner Shandong Dongming Petrochemical Group have jointly bid for the refinery located near the port.
Government spokesman Rajitha Senaratne said the Chinese companies had asked to sell refined products on to the local market, but had been told just to export.
“The Chinese companies asked permission (to supply local markets), but we did not give them permission. We asked them to participate in tenders of local suppliers, if they want to sell locally,” he told Reuters.
Another government official, who didn't want to be named as he is not authorised to speak to the media, said Sri Lanka did not want to cede control of the local fuel market to Chinese firms.
Sri Lanka's $6 billion market is controlled by state-run Ceylon Petroleum Corp and Lanka IOC, a subsidiary of Indian Oil Corp.
“We have asked the Chinese firms to go for partnership with existing players if they want to sell their products in the local market,” the official said. “We don't want both our companies to suffer by letting another player in.”
The two Chinese companies seeking local market access did not respond to a Reuters request for comment.
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