Author: TELO Admin

Sri Lanka is mulling measures to lure back Chinese tourists in a bid to alleviate an unprecedented debt crisis, its tourism minister said, as the South Asian nation tries to stabilize the economy.

The country is targeting half a million Chinese tourists in 2024, nearly double its pre-Covid visitor levels, Tourism Minister Harin Fernando said at a press briefing in Beijing on Monday.

If each Chinese tourist spent $5,000 that could raise a figure comparable to the recent International Monetary Fund bailout, he said. “If you really look at it, tourism can get Sri Lanka out of this mess,” the minister added.

Sri Lanka clinched a $3 billion bailout loan from the IMF in March after six months of negotiations. It is still trying to reach a debt restructuring agreement that would help the release of the next round of funds. China has been an observer to those talks.

Paris Club members account for $4.8 billion, or more than 10% of Sri Lanka’s external debt, according to IMF data. That’s slightly higher than China, which stands at $4.5 billion, while India is owed $1.8 billion. Palitha Kohona, Sri Lanka’s ambassador to China, who was also at the event in Beijing, said bilateral debt talks were ongoing.

Fernando said he’d presented a plan to Sri Lanka’s government that included free tourist visas for Chinese travelers until November. “They can just walk into Sri Lanka with a Chinese passport,” he said.

The minister also said he was holding talks with Chinese carriers, including China Southern Airlines and Air China, asking them to increase the number of flights to Sri Lanka. This month, carriers are operating 92 flights between the two countries, down from 174 in the same month in 2019, according to flight data provider Cirium.

Sri Lanka has battled its worst economic problems since independence in recent years, after protests over soaring inflation, food shortages and lengthy power cuts toppled the government. A series of deadly terror blasts in 2019 also hit tourism arrivals, along with the subsequent Covid pandemic.

Before all that, Sri Lanka saw some 266,000 Chinese arrivals in 2018, according to the Sri Lanka Tourism Development Authority. That fell sharply to 167,863 the following year, according to the authority.

The return of Chinese tourists is considered essential to the rebound of global tourism, but outbound travel is still lagging pre-pandemic levels. More than half of Chinese travelers said they hadn’t set plans to go abroad this year in a survey published last month.

In a significant move to address Sri Lanka’s fuel supply challenges, a contract agreement was signed with Sinopec, a leading international petroleum company. The agreement, signed today (22), marks a crucial step in ensuring a steady and uninterrupted fuel supply for the nation, the President’s Media Division (PMD) said.

The signing ceremony took place at the Presidential Secretariat, with representatives from both Sri Lanka and Sinopec in attendance.

Secretary of the Ministry of Power and Energy M.P.D.U.K. Mapa Pathirana and Chen Chengmin, Managing Director of Fuel Production and Marketing Department of Sinopec Company, signed the agreement in front of the President, it added.

On the Sri Lanka side, the Secretary of the Ministry of Power and Energy, the Chairman & Managing Director of the Ceylon Petroleum Corporation, and the Chairman of the Ceylon Petroleum Storage Terminals Limited participated. From Sinopec, representatives from Sinopec Fuel Oil Lanka (Private) Limited, Sinopec Fuel Oil Sales Co. Ltd (People’s Republic of China), and Sinopec Fuel Oil (Singapore) Pte. Ltd. were present to formalize the agreement.

In response to the on-going foreign exchange crisis in Sri Lanka, the Ministry of Power and Energy has taken this decisive action to ensure an uninterrupted fuel supply to consumers. With the inability to provide sufficient foreign exchange for fuel shipments, the Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Company (LIOC) faced significant challenges, according to the PMD.

To tackle this issue, the Ministry explored various strategies and one of them involved inviting Expression of Interests (EOIs) from reputable petroleum companies established in producing countries. The goal was to import, store, distribute, and sell Petroleum Products in predetermined Distribution Dealer operated Networks in Sri Lanka. The Cabinet of Ministers approved this initiative.

One of the key requirements for new retail suppliers entering the market was their ability to secure forex requirements without depending on the domestic banking sector. It was mandated that these companies source their own funds for fuel procurement through foreign sources, at least during the initial one-year period of operation.

After receiving EOIs, the companies that were shortlisted were invited to submit detailed proposals in response to a Request for Proposal (RFP) document. The Cabinet Appointed Special Committee (CASC) and the Technical Evaluation Committee (TEC) thoroughly scrutinized the proposals and recommended awarding contracts to the following companies, subject to negotiations:

• M/s Sinopec Fuel Oil Lanka (Private) Limited, F5, Hambantota Maritime Center, Mirijjawila, Hambantota, Sri Lanka

• M/s United Petroleum Pty Ltd, 600 Glenferrie Rd, Hawthorn, Victoria 3122, Australia

• M/s RM Parks, 1061 N. Main St, Porterville, CA 93257, USA, in collaboration with Shell PLC

The Cabinet of Ministers, considering the recommendations made by the CASC and the Committee Appointed by the Cabinet, granted approval to award the contracts to the selected suppliers.

Sinopec, along with its affiliated companies, is set to commence operations in Sri Lanka within 45 days following the issuance of the license. This development brings hope for a more stable and reliable fuel supply, boosting the country’s energy sector and providing assurance to consumers.

Minister of Power and Energy Kanchana Wijesekera, State Ministers D.V. Chanaka, Indika Anuruddha, Shehan Semasingha, President’s Senior Advisor on National Security and Chief of Staff Sagala Ratnayake, President’s Secretary Saman Ekanayake, Central Bank Governor Dr. Nandalal Weerasinghe, Chinese Ambassador Qi Zhenhong and representatives of Sinopec Oil Lanka Pvt. Ltd, Sinopec China Pvt Ltd and Sinopec Singapore Pvt Ltd were present on this occasion, according to the PMD.

The deal with Sinopec– a state-owned Chinese company –was reached months after the two sides commenced their negotiations and Sri Lanka approved a proposal in March to liberalise the fuel retail marketing in the country with more players from China, Australia and the US.

Sri Lanka’s fuel retail market was a state monopoly under the Ceylon Petroleum Corporation (CPC) until 2003 when the Indian Oil Company (IOC) was allowed to operate.

“Negotiations have been completed with Sinopec Fuel Oil Lanka Ltd and its parent company in China and Singapore for a long-term contract on important storage, distribution and sale of petroleum products in the island nation,” the statement issued by the president’s office said.

In March, the Cabinet of Ministers had granted approval to award licenses to China’s Sinopec, Australia’s United Petroleum and RM Parks of the USA, in collaboration with multinational oil and gas company – Shell plc, to enter the fuel retail market in Sri Lanka.

Thereby, they are be granted a license to operate for 20 years to import, store, distribute and sell petroleum products in Sri Lanka.

In June 2022, the Cabinet of Ministers had green-lighted the proposal to open up Sri Lanka’s fuel import and retail sales market to companies from oil-producing nations.

In October the same year, the Petroleum Products (Special Provisions) Bill, paving the way for new suppliers to enter as importers, distributors and retail operators for petroleum products, was approved by the Ministerial Consultative Committee on Power and Energy.

Later on April 26, a team of officials from Sinopec visited Sri Lanka in order to finalise the agreements and commencement of operations for retail fuel sales, and accordingly, the timeline, conditions of the relevant agreement and other concerns were discussed between the team of officials and technical experts from the Chines energy giant and the Minister of Power and Energy, Kanchana Wijesekera.

It had been decided that the agreements would be signed in mid-May, and that operation would commence 45 days thereon.

Also, the US-based oil company RM Parks Inc. and the British multinational oil and gas company Shell PLC had held discussions with Minister Wijesekera on commencing retail fuel sales in Sri Lanka in the first week of June this year.

Wijesekera, joining the political talk show “360°” on TV Derana earlier in April, revealed that each company will handle 150 CPC dealer-operated filling stations in the local market.

At present, a total of 1,142 filling stations are under the purview of the CPC, however, the corporation fully owns only 234 of them, the minister explained, adding that 450 out of the remaining 908 filling stations owned by private distributors would be allocated to the three foreign oil companies.