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Sri Lanka's proposed USD 3.7 billion petroleum refinery investment in Hambantota faces a major setback after a Cabinet-appointed negotiating committee recommended terminating the existing agreement with Chinese petroleum giant Sinopec and inviting fresh international investment proposals.

The recommendation represents a significant development in the Government's efforts to balance the urgent need for foreign investment against the protection of national economic interests, public revenue and strategic energy infrastructure.

However, the final Cabinet decision on terminating the existing award and proceeding with a fresh investment process remains pending.

The project, originally awarded to China Petroleum and Chemical Corporation (Sinopec) following a Cabinet decision on November 27, 2023, was promoted as one of the largest foreign direct investments in Sri Lanka's history.

Valued at approximately USD 3.7 billion, the proposed facility was designed to process 200,000 barrels of crude oil daily, with most refined petroleum products intended for export markets.

The investment agreement was signed during President Anura Kumara Dissanayake's state visit to China in January 2025, raising expectations that Hambantota could emerge as a major regional petroleum processing and export centre.

But negotiations over the project's commercial conditions subsequently became increasingly difficult.

According to information surrounding the committee's deliberations, Sinopec presented ten major demands covering domestic petroleum sales, land allocation, tax holidays, foreign exchange arrangements, import exemptions, withholding taxes, electricity sales and preferential treatment for associated investors.

The Cabinet-appointed Negotiating Committee (CANC), chaired by Presidential Chief of Staff B. K. Prabhath Chandrakeerthi, rejected several significant demands.

Among the most contentious was Sinopec's reported request to secure access to up to 40 per cent of Sri Lanka's domestic petroleum market.

The committee rejected the proposal to supply petroleum products directly to local dealers or end consumers under the proposed refinery arrangement.

It also rejected the company's request for treatment equivalent to the State-owned Ceylon Petroleum Corporation's Sapugaskanda refinery, including future domestic sales provisions.

The taxation dispute was another major obstacle.

Sinopec reportedly sought Strategic Development Project status and tax holidays extending between 15 and 25 years. The committee rejected a proposed 25-year corporate income tax holiday and extensive exemptions covering dividends, interest, technical service fees and royalties.

Proposed personal income tax exemptions for expatriate employees were also rejected.

These demands assumed particular importance because Sri Lanka is implementing major revenue reforms under its US$2.9 billion International Monetary Fund-supported programme.

The Government faces continuing pressure to strengthen public revenue, maintain fiscal discipline and restore confidence following the country's economic crisis.

Granting extensive tax concessions to a major foreign investor would therefore require a careful assessment of the potential impact on national revenue.

Land allocation also emerged as a significant issue.

Although approximately 500 acres had initially been allocated in Arabokka, Sinopec reportedly sought another 200 acres near Hambantota Port.

The negotiating document identifies disagreements involving a proposed 99-year lease arrangement covering approximately 700 acres and the possible removal of a one per cent State royalty payment.

Environmental compliance and the financial responsibilities associated with controlling industrial emissions near southern coastal ecosystems also became matters of disagreement.

The committee did not, however, reject every investor request. It accepted certain proposals involving additional land, import exemptions, associated investors' rights and other concessions.

This indicates that the negotiations involved attempts to accommodate the investment while maintaining limits on conditions considered contrary to Sri Lanka's financial and strategic interests.

Following the communication of its earlier negotiating position in February 2026, Sinopec reiterated its position in a letter dated March 15, 2026.

The committee subsequently concluded that the project could not proceed under the prevailing conditions and recommended terminating the November 2023 award.

The recommendation could open the way for a fresh international Request for Proposals process, potentially attracting alternative investors and more competitive commercial arrangements.

The Government now faces a crucial decision: whether to proceed with termination and establish a new framework capable of securing the investment benefits originally expected from Hambantota.

For Sri Lanka, the outcome will have implications far beyond one refinery project. It will demonstrate whether the country can welcome major international investors while protecting its fiscal interests, domestic energy security and sovereign decision-making.

President Anura Kumara Dissanayake has announced that the Pay-As-You-Earn (PAYE) tax threshold will be revised through the 2027 Budget, which is scheduled to be presented to Parliament next week.

He made the announcement while addressing the National Trade Union Convention today.

Highlighting the private sector's significant contribution to the national economy, the President said the Government had given special attention to the economic well-being of employees in the sector.

He stated that the Government had taken steps to increase basic salaries following discussions with private-sector institutions and business associations. Attention had also been given to employees' additional allowances and PAYE tax deductions affecting higher-income earners.

President Dissanayake noted that the existing PAYE tax threshold had previously been increased from Rs. 100,000 to Rs. 150,000. He said the Government expects to raise it further through the upcoming Budget to provide additional tax relief to employees.

The President also emphasised that the Government has a responsibility to protect employees across all sectors, including the public, semi-government, plantation and private sectors.

Opposition Leader Sajith Premadasa said that Sri Lanka is facing a severe shortage of cancer treatment drugs and other essential medicines.

Rasing the issue in Parliament yesterday (6), he said the shortages are hitting patients in both government and private healthcare institutions.

He said several basic medicines remain out of stock, including Adrenaline, Atropine, Piriton, Ondansetron, Maxolon, Phenergan and Hydrocortisone.

He claimed some of these are unavailable even in private hospitals, which he said has created serious obstacles to essential treatment.

The Opposition Leader said the lack of cancer drugs and other critical medicines adds to the burden on patients who are already struggling to obtain care.

He urged the Government to give the matter urgent attention.

He said ministers must act without delay to guarantee an uninterrupted supply of essential medicines across the national healthcare system, a step he noted is vital for the safety of patients nationwide.

A special school holiday has been declared for all Tamil-medium schools in the Central, Uva, Western and Sabaragamuwa provinces on Monday (09), in view of the Deepavali festival, which falls tomorrow (08).

The decision was taken following a special request made by Deputy Minister of Plantation and Community Infrastructure Sundaralingam Pradeep.

The Governors of the respective provinces have issued instructions to the Provincial Directors of Education regarding the special holiday.

However, academic activities at the affected Tamil-medium schools will be conducted as usual on Saturday (14) to compensate for the holiday granted on Monday.

Thimbirigasyaya has recorded the highest rainfall in Sri Lanka, with 146.6 mm during the 24-hour period ending at 6.00 a.m. today (07), according to the Disaster Management Centre (DMC).

Mattakkuliya recorded the second-highest rainfall at 125.5 mm, followed by Bopagama with 117.6 mm.

A 50-year-old man from Karadiyana, Piliyandala, has been arrested for allegedly possessing 75 litres of illicit liquor during a raid conducted in the area yesterday (06).

According to the police, the suspect was found with 100 bottles of illicit liquor during the operation.

The raid was carried out around noon by a team of officers from the Walana Central Anti-Corruption Strike Force, acting on information received.

The suspect was subsequently handed over to the Piliyandala Police Station.

Further investigations into the incident are being conducted by the Piliyandala Police.

The Free Lawyers Association alleges that the government plans to dismantle its centralised digital treasury management platform in a move that threatens state fiscal stability.

Speaking at a press conference held at the Flower Road office of former President Ranil Wickremesinghe on Thursday (05), FLA spokesman Rajith Keerthi Tennakoon claimed that authorities intend to replace the modern Integrated Treasury Management Information System (ITMIS) with an outdated legacy platform.

According to the former Govenor, successive governments have spent approximately USD 15 million since 2010 to implement the advanced digital infrastructure, making a return to the system established in 1993 a major technological setback.

Tennakoon warned that abandoning the upgraded software threatens financial controls and breaches campaign commitments to modernise governance.

He also highlighted economic pressures, pointing to 12 post-election taxes that have heavily burdened small enterprises and low-income families.

Furthermore, Tennakoon called for answers regarding unaddressed public sector financial irregularities, citing substantial losses at Sri Lanka Post and the Treasury alongside duplicate disbursements recorded across state agencies between January and September 2026.

The activist warned that dismantling modern financial infrastructure will compromise state expenditure oversight and erode public confidence in state management.

Samagi Jana Balawegaya (SJB) MP Ajith P. Perera said that the Government’s claim that the Prevention of Organised Crimes Bill follows a United Nations convention is false.

He made these remarks during yesterday’s (05) Parliamentary debate on the Trusts (Amendment) Bill.

Perera said a UN report had made clear that the Bill was not drafted in line with the organisation’s conventions.

He said the UN had also urged the Government to ensure that any new law complies with international standards.

On that basis, he accused the Government of misleading Parliament about the origins of the proposed legislation.

He questioned who had written a Bill containing such serious provisions and asked whether the Government had consulted the Bar Association of Sri Lanka, civil society groups or subject experts.

He said it had consulted none of them and described the drafting process as entirely arbitrary.

Perera said that the Government was introducing the law to suppress democratic dissent against its own administration.

He said the measure, presented as a way to protect the state from terrorism, was harsher than the existing Prevention of Terrorism Act (PTA).

The opposition lawmaker alleged that it borrows elements from the PTA, which he described as a matter of grave concern.

Noting that the Bill is under review by the Supreme Court, Perera said he trusted the Court would deliver a sound ruling that upholds the fundamental human rights of citizens.

He said the opposition would offer its support if the Government presented a fresh Bill on organised crime that is consistent with human rights.

Samagi Jana Balawegaya (SJB) MP Ranjith Madduma Bandara informed Parliament that the government, despite its initial promises to preserve public rights, is now actively subverting democratic principles.

The SJB General secretary asserted that the government had systematically abandoned its core commitments to uphold civil liberties.

Drawing attention to a series of recent human rights concerns, he said that 17 individuals had died in police custody alongside the fatal shooting of a child.

He raised concerns over the proposed Prevention of Organised Crime Act, revealing that 26 petitions had already been lodged in court against the measure.

Bandara pointed out the country is currently operating under peaceful conditions, making the introduction of stringent anti-terrorism and crime legislation unnecessary.

He warned that such statutes risk granting excessive powers to law enforcement agencies at a time when over 1,000 police officers have faced interdiction under the present government.

Furthermore, he criticised efforts to regulate traditional religious practices, specifically highlighting interventions regarding donation boxes at Buddhist temples.

He said that judicial independence had already been compromised following the passage of the 22nd Amendment.

Bandara added that the administration is resorting to public intimidation and state authority to cover up its own political instability.

Opposition MP Shanakiyan Rasamanickam says the government must explain why citizens face relentless cost of living increases while the Treasury holds hundreds of billions of rupees in reserve.

Speaking during the parliamentary sitting on 6 November, he urged immediate relief measures for ordinary citizens.

Rasamanickam highlighted that headline inflation climbed to 8.3 per cent in October while food inflation touched 8.8 per cent.

Following a recent price hike on 2 November, staple bakery items such as bread surged by Rs. 5, compounding the pressure on households already struggling under cumulative electricity tariff increases of over 28 per cent implemented since April.

He challenged assertions made by Deputy Minister Kaushalya Ariyarathne that fuel was being retailed below import costs, pointing out that diesel and petrol were being brought into the country at Rs. 307 and Rs. 322 per litre respectively.

Citing official figures from the Ministry of Finance Mid-Year Fiscal Position Report for 2026, he revealed that the Treasury held a cash balance of Rs. 690.3 billion at the end of June.

He argued that it was illogical to impose additional fuel taxes while holding such liquidity, demanding that available public funds be deployed directly to relieve economic strain.

He drew attention to the Rs. 57 billion spent on energy subsidies in the first half of the year, noting that Rs. 41 billion went to the Ceylon Petroleum Corporation and Rs. 15 billion supported electricity tariffs.

The CPC subsequently recorded a net profit of Rs. 29.2 billion, prompting the lawmaker to question whether state corporations exist to turn a profit or serve the public, particularly after taxpayers settled Rs. 750 million in state bank loans for the entity in the previous year.

Demanding complete transparency from the government, Rasamanickam submitted a series of formal questions regarding the total treasury funds spent on fuel subsidies from January to date, the monthly relief expenditure, and precise sales volumes across petrol and diesel categories.

He called on the government to clarify whether the Rs. 41 billion allocation to the CPC was fully passed on to consumers and whether fuel relief would extend beyond December 31, 2026.

Prioritising support for public transport operators, agricultural workers, and the fishing sector, he warned that rising diesel costs could double land cultivation expenses for farmers ahead of the upcoming Maha season.

Chief Inspector Varuni Bogahawatta, who served as the Officer-in-Charge of the Administration Division of the Kotawila Police Station, and four other suspects have been further remanded until November 20.

The order was issued by Matara Chief Magistrate Chathura Dissanayake.

During the proceedings, the Criminal Investigation Department (CID) informed the court that investigations would be completed and the relevant findings submitted on November 20.

Chief Inspector Bogahawatta was arrested by the CID over allegations that she had failed to disclose the sources of funds used to purchase a vehicle and settle its lease instalments.

A luxury vehicle in her possession was also recently taken into CID custody.

The investigation was launched following revelations that the vehicle's lease instalments had allegedly been paid by an individual suspected of involvement in the misappropriation of more than Rs. 1 billion from the Matara Cooperative Society.