Sri Lanka oil refinery deal will take a year to finalise

An agreement to build a proposed $3.85 billion oil refinery in Sri Lanka will take at least a year to be finalised as its main investor, India’s Accord Group, says it is yet to recruit partners and conduct an assessment of the plan’s viability. The comments add to confusion about the project, which was announced last week by the Sri Lankan government as the nation’s largest single foreign direct investment ever, but has since been the subject of conflicting statements by various parties. Accord’s Chairman S Jagatrakshakan, a former Indian government minister, said he has submitted a preliminary proposal to the Sri Lankan government to invest in the project but has not finalised any terms of the deal. “The project assessment and financial viability assessment will take at least a year. We have not sorted out any of the equity partners for the projects, but are in talks with investors from many countries,” he said. The 68-year-old politician is campaigning in Tamil Nadu for a seat in the current general election. He was an MP and minister in the last Congress-led government in 2009-2014. When the Sri Lankan government made the announcement on March 19, it said the oil refinery would be a joint venture between Oman’s oil ministry and Accord and cost $3.85 billion. India and China have been vying for political influence in Sri Lanka in recent years, with investment a key part of the battleground. The refinery’s proposed site is 585 acres of land near the site of the new Humbantota International port and a related industrial zone — both run by Chinese entities — on Sri Lanka’s southern coast. A Sri Lankan government document showed the previously proposed deal would have a debt to equity ratio of 51:49, and said the Accord Group’s Singapore entity, Silver Park International Pte Ltd, would fund 70 per cent of the equity, with Oman funding the rest. However, Jagatrakshakan said he expected 70 per cent of the project to be bankrolled by debt from financial institutions, adding that Silver Park would get more investors to fund the equity stake. “We are looking at getting 20-30 investors on board for the 30 per cent equity investment in the project. We expect 70 per cent of the project to be bankrolled by debt from financial institutions,” he said. — Reuters