Sri Lanka, India to jointly develop strategic Trincomalee Oil Tank Complex

Sri Lanka has agreed to implement a joint project with India to redevelop the strategic World War II-era oil tank farm in the eastern port district of Trincomalee, the island nation's government announced here on Tuesday.

The Lankan government said that after reviewing the three existing agreements with the Indian government regarding the strategic Trincomalee Oil Tank Complex, commonly known as the Trinco Oil Tank Farm, the two sides have reached an agreement to implement a joint development project.

The Cabinet has approved the proposal to allocate 24 and 14 oil tanks of Trincomalee Oil Tank Complex to Ceylon Petroleum Corporation (CPC) and the local operators of the Indian Oil Company (LIOC) respectively while remaining 61 oil tanks are to be developed under Trinco Petroleum Terminal Pvt. Ltd, with shares of CPC (51%) & LIOC (49%).

Joint Cabinet Spokesperson (Minister) Udaya Gammanpila said this joint venture will be for a lease period of 50 years.

The new agreement will be an extension of the 2002 agreement with the local operators of the Indian Oil Company, LIOC, the Daily Mirror newspaper reported. Sri Lanka in 2002 entered the original deal with India on the island's most strategic oil storage complex, which was used as a supply base during World War II.

India at all times had shown a strategic interest in the Trincomalee tank farm which the British rulers had built to refuel Allied warships and aircraft.

In October, President Gotabaya Rajapaksa told visiting Foreign Secretary Harsh Vardhan Shringla that Indian investors are invited to invest in the island nation and Sri Lanka was keen to resolve the situation regarding the Trincomalee oil tanks in a manner that is beneficial to both countries.

The World War II-era oil storage facility, with a capacity of nearly 8 million barrels of oil, located in the strategically advantaged port district of Trincomalee has been a key bilateral economic partnership link for decades.

Since 2003, the Lanka IOC, the Sri Lankan subsidiary of India's oil major Indian Oil Corporation (IOC), has the leasing rights to 99 tanks at the facility for a period of 35 years for an annual payment of USD 100,000.

Shringla had also visited the oil storage site during his trip to Sri Lanka. The visit was considered significant as oil sector trade unions in the country have demanded that the tanks be brought under the control of the state fuel entity Ceylon Petroleum Corporation (CPC).

The formalisation of the agreement next week will come in the background of Sri Lanka seeking India's help to tide over its current economic woes exacerbated by the ongoing foreign exchange crisis in the local economy.

The Sri Lanka-India oil tank storage venture comes amid mounting concern over growing Chinese influence in the country. Officials said that the island nation has shut its only refinery for its inability to pay for crude oil and was negotiating a credit line with India for fuel purchases.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)