New Delhi: Sri Lanka has secured a $3.7 billion investment from Chinese oil refiner Sinopec during President Anura Dissanayake’s state visit to Beijing. Colombo has termed the deal the country’s “largest foreign direct investment to date”.
While a joint statement issued on Thursday (January 16) made no mention of the end of Sri Lanka’s moratorium on permissions to foreign research vessels to visit the country – a matter of concern in New Delhi – the two sides said they were committed to continuing “maritime cooperation”.
Dissanayake arrived in China on Tuesday for his second foreign visit after being elected president of Sri Lanka in September. He met Chinese President Xi Jinping and premier Li Qiang among other dignitaries.
An announcement by Sri Lanka’s President’s Media Division said the $3.7 billion investment by the state-run Sinopec will fund an oil refinery in the Hambantota area in the country’s south.
This “state-of-the-art” refinery is to have a capacity of 200,000 barrels a day and is expected to export “a substantial portion” of its output, the official communique also said.
In 2017, Colombo leased the Hambantota port to the state-owned China Merchants Port Holdings after Sri Lanka was unable to hold up its end of loan repayment commitments, fanning fears in New Delhi over the port’s potential use for military purposes.
India has also been concerned by the presence of Chinese research vessels in Sri Lankan waters. Following protests from New Delhi and Washington, Colombo had announced a one-year moratorium on permission to foreign research vessels, which was to end this month.
The joint statement issued during Dissanayake’s Beijing visit on Thursday did not mention the moratorium but said that Sri Lanka and China “share the desire to continue maritime cooperation” and “hold regular bilateral consultations on maritime affairs”.
It also featured an assurance from Colombo that it would “never allow its territory to be used for any anti-China, separatist activities”.
During Dissanayake’s state visit to New Delhi last month – his first as president – he said he had assured Prime Minister Modi that his government “will not allow our land to be used in any way in a manner that is detrimental to the interests of India”.
Asked at a press conference a week before Dissanayake left for Beijing whether India and Sri Lanka had discussed the moratorium, Indian high commissioner to Colombo Santosh Jha said they had not, The Hindu reported.
But given Dissanayake’s “categorical” statement while in India as well as his alliance’s election manifesto, Jha added: “We take Sri Lanka for its word … we completely trust Sri Lanka to take the right actions in that regard.”
The IMF’s $2.9 billion bailout program to Sri Lanka in light of the country’s economic crisis requires it to complete debt restructuring and debt reworking with creditors including India and China.
The former had during the economic crisis outdone China in offering currency swaps, lines of credit and assurances to Colombo, which contributed to the IMF’s approving its bailout program.
Dissanayake and his government will therefore need the goodwill of India and China – both of which are vying for influence in the island country – so that Sri Lanka can fully recover from the crisis.
In Beijing, the Sri Lankan side “expressed its desire for the early implementation of the agreed debt restructuring plan together with Chinese financial institutions”, the joint statement said.
It added that China for its part would “maintain friendly communication with other creditors” to help Colombo overcome its financial difficulties.
The central banks of both countries renewed their currency swap agreement, the statement noted.
The two sides also agreed to enhance bilateral cooperation with regard to China’s Belt and Road Initiative infrastructure investment program.
They signed a plan, as per the joint statement, to “upgrade China-Sri Lanka high-quality Belt and Road cooperation and jointly open up new space for win-win development of higher standard, stronger resilience and greater sustainability”.
Beijing “reiterated its commitment to an independent foreign policy of peace”, while Sri Lanka underscored its “commitment to an independent non-aligned foreign policy”.
