COLOMBO: Chinese oil major Sinopec expects to start operations in Sri Lanka on Sept. 20 and will be allowed to sell fuel for less than the maximum retail price set by the government, Sri Lanka’s power minister said on Tuesday.

Sinopec’s entry into Sri Lanka will help reduce pressure on Sri Lanka’s foreign exchange reserves, and the island nation expects two other international fuel operators to start operations by October and November, Kanchana Wijesekera said.

“Reducing pressure on our foreign exchange with Sinopec’s entry will also help us increase fuel imports and strengthen the economy,” Wijesekera told reporters.

Australia’s United Petroleum and U.S. firm RM Parks in collaboration with Shell are the other two companies that have received approval.

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The entry of the new players will end a market duopoly of state-run Ceylon Petroleum Corp and Lanka IOC, a unit of Indian Oil Corp.

Under the new deal, the Chinese firm will be given a 20-year licence to operate 150 fuel stations and will also be able to invest in 50 new fuel stations.

Sri Lanka is grappling with its worst financial crisis since independence from the British in 1948 with reserves at $3.8 billion at the end of July.

The island’s economy was severely hit last year by spiralling energy costs worsened by the war in Ukraine, which caused long lines at fuel stations and hours-long power cuts.

“Sinopec and Vitol have also been shortlisted for a refinery project in southern Sri Lanka and we expect their request for proposals to be handed over at the end of August,” Wijesekera added.

The refinery project is expected to cost as much as $4 billion and has been in talks since 2019.