Colombo, Jul 4 (IANS): China's oil & gas giant, Sinopec is set to make an entry in Sri Lanka's fuel industry which is presently handled jointly by the state-run Ceylon Petroleum Corporation and India’s Indian Oil Company (IOC).

Foreign Minister Ali Sabry, who had recently visited China, said that Sinopac informed him about their readiness to start a refinery in the island nation.

During the trip, the Minister also met China's Ministers of Finance and Foreign Affairs, as well as the Chairman of the Exim Bank.

Sri Lanka signed an agreement with Sinopec in May to ensure a steady and uninterrupted fuel supply.

In the heights of the economic crisis last year, people across Sri Lanka had to wait for days in long queues outside petrol pumps as supply ran short.

Justifying the move to allow Sinopec to enter the crisis-hit Sri Lanka’s fuel market, the Power and Energy Ministry had stated that it was in response to the foreign exchange crisis and 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. 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 Ministry said.

It added that the goal was to import, store, distribute, and sell petroleum products in pre-determined distribution dealer operated networks in Sri Lanka.

The Cabinet thn subsequently approved the decision.

However, Sinopec has been allowed to enter fuel market with the condition that new retail suppliers willhave 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.