Does the Government know what it's doing with Sinopec?

DOES Sri Lanka need a mega refinery in Hambantota? The Government says yes, and there are no known dissenting voices, even from those speaking for the environment and for the birds.

- By Prof. Rohan Samajiva

I, for one, made the case for a refinery adjacent to the port in Hambantota 15 years ago. The port and the refinery have synergy. Cheap bunkering will make the port attractive. Transport of the refinery's inputs and outputs will improve the refinery's business case. So, no dissent on the big question.

Small print in agreements

But questions remain. The terms and conditions of the investment agreement that is to be signed with the Board of Investment requires close examination.

■ Is there a minimum amount of refined petroleum products that Sri Lanka is obligated to purchase from this refinery: 40%, 30 % or 20% (all numbers mentioned in news reports)? How will the price of the transactions be determined? Is it a take-or-pay arrangement? Is it just for the Sinopec fuel stations or also for Ceypetco and for electricity generation?

■ Have projections been made whether the demand for refined petroleum products in the country can be matched with supply from the 200,000 barrels per day (bpd) Hambantota refinery and the planned 150,000 bpd from the upgraded Sapugaskanda refinery?

■What is the length of the tax holiday that is under discussion? If the Government gets no taxes from the refinery, what benefits will flow to the nation's economy? Has the loss to the exchequer been calculated?