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Saturday April 20th, 2024

Sri Lanka slashes 2023 FDI target to $1 bln; hopes on metal, refinery plants to help

ECONOMYNEXT – Sri Lanka has revised down its 2023 Foreign Direct Investment target to $1 billion from earlier $1.5 billion, but hopes two metal processing plants and an oil refinery in the investment zone of Chinese controlled Hambantota Port could help surpass the latest target.

The island nation has suffered with an unprecedented economic crisis and has declared bankruptcy with sovereign debt default in April last year. Since then it has seen an economic recovery with the assistance of a $3 billion IMF loan programme, but the island nation is yet to recover to its pre economic crisis level.

State Investment Minister Dilum Amunugama in July said the target set by the Board of Investments (BOI) for FDI for 2023 was $1.5 billion with the first quarter of 2023 amounted to $211 million.

However, on Friday, the minister said the 2023 target was $1 billion without any reason for the downward revision.

Amunugama said the island nation has signed FDI worth $701 million in the first nine months of this year.

“These are also signed, part of the funds remitted, and BOI payments made,” he told reporters in Colombo at a media briefing on Friday (13).

“Our target is generally $1 billion. If we are lucky, we can kick off the refinery this year. I am also pushing hard on two more metal processing projects as well.”


The Government has already shortlisted only Singapore’s Vitol and China’s Sinopec to invest a minimum of $4 billion to build a new oil refinery in Hambantota.

Government officials have said the final decision on the refinery is likely to be taken soon with Sinopec having a greater chance of winning the tender. Sources close to President Ranil Wickremesinghe have said a discussion on the oil refinery is on the card during his four-day visit to China.

“On the refinery, the tender has been opened. It has not been awarded yet. We (BOI) have given the land. Whoever gets the land can start building in the land,” Amunugama said

When asked if the oil refinery is already awarded to Chinese Sinopec, Amunugama said: “I have not officially been told. The financial analysis is going on. We have decided the land. The timeline is not decided yet.”

He also said the BOI is fast tracking two metal processing plants in the Hambantota investment zone where China will be dominating without revealing the names of investors.

“One is $280 million and the other one is $250 million. So if we are lucky, we will be able to overshoot our target, which is $1 billion,” Amunugama said.

The two metal processing plants will be manufacturing metal sheets.

“One is a project that brings crushed cars in an environmentally friendly form where oil and gases are taken out. They are reproduced into the sheets,” he said.

“The other one is copper, which comes in crushed form, which will be converted into row materials and copper sheets. One project is roughly about 500 container movements a week from Hambantota port.” (Colombo/Oct 15/2023)

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Sri Lanka discussing giving extra land, water for Chinese oil refinery

ECONOMYNEXT – Sri Lanka is in discussions with China’s Sinopec to give extra land and assure water supplies after the company decided to expand the capacity of a planned oil refinery in Hambantota, Energy Minister Kanchana Wijesekera said.

“There are concerns on how the water supply is going to be provided for the refinery,” Minister Wijesekera told reporters Friday.

The refinery will need more land and also revise conditions in a Board of Investment agreement, he said.

Read more
Sinopec to double capacity of new refinery in Sri Lanka’s Hambantota

Recommendations and decisions from Sri Lanka’s side had already been sent and Sinopec is expected to revert back in May.

“We are hoping to sign the agreement once everyone has agreed,” Wijesekara said.

The principle agreements are expected to be signed by June, he said.

The refinery could sell up to 10 percent of its output in the domestic market.

“There is no commitment by the government to purchase anything,” Minister Wijesekera said. (Colombo/Apr19/2024)

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Sri Lanka rupee closes weaker at 302.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 302.00/50 to the US dollar in the spot forex market on Friday, down from 301.50/302.00 a day earlier, dealers said.

There was increased demand for dollars after the central bank bought 715 million dollars from forex markets. In the previous two months it was buying on average about 200 million US dollars, leaving market participants and bank in a ‘oversold’ position.

There were some official dollars sales Friday dealers said.

READ Sri Lanka rupee quoted wide to US dollar as peg inconsistencies flare up

Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed at 11.30/40 percent down from 11.35/40 percent.

A bond maturing on 15.09.2027 closed at 11.95/12.05 percent up from 11.90/12.05 percent.

A bond maturing on 15.12.2028 closed stable at 12.15/25 percent.

A bond maturing on 15.09.2029 closed stable at 12.30/40 percent.

A bond maturing on 01.10.2032 closed stable at 12.40/50 percent. (Colombo/Apr19/2024)

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Sri Lanka stocks close down, banks trade down

ECONOMYNEXT – The Colombo Stock Exchange closed down on Friday, data on its site showed.

The broader All Share Index closed down 0.38 percent, or 44.80 points, at 11,753; while the S&P SL20 Index closed down 0.53 percent, or 18.46 points, at 3,456.

Turnover was at 1.4 billion. The diversified financials (Rs366mn) and banks (Rs266mn) sectors continued to see selling pressure.

“This was possibly due to uncertainty around the bond discussions,” market participants said.

With the exception of Sampath Bank Plc (up at 77.50) all other banks traded down in the day. Commercial Bank of Ceylon Plc was down at 104.50, Hatton National Bank Plc was down at 188.50, and DFCC Bank Plc was down at 77.00.

LOLC Finance Plc saw the most trades and closed up at 6.40. Another LOLC company, Browns Investments Plc, also saw high traded volumes and closed up at 5.60.

Softlogic Capital Plc was up at 7.00, and Softlogic Holdings Plc was up at 11.20. A trading suspension imposed on SHL.N0000 was lifted effective today as the company submitted the annual report for the year ended 31st March 2023.

However, shares of the Company will remain in the Watch List “due to Qualified Audit Opinion and Emphasis of matter on going concern in the Independent Auditor’s Report in the Audited Financial Statements for the year ended 31st March 2022.”

Dialog Axiata Plc, which announced its merger with Bharti Airtel Thursday, saw its share price close up at 11.90.

“There was some traction on index heavyweights,” market participants pointed out.

Top contributors to the APSI included Aitken Spence Plc (up at 134.50), Ceylon Tobacco Company Plc (up at 1,245.25, and Lion Brewery (Ceylon) Plc (up at 1,048.50).

There was a net foreign inflow of 5 million. (Colombo/Apr19/2024)

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