Sri Lanka, India ink deal to jointly redevelop strategic Trincomalee Oil Tank Complex

Sri Lanka on Thursday formally signed an agreement with India to jointly redevelop the strategic World War II-era oil tank farm in the island nation's eastern port district of Trincomalee.

Energy Minister Udaya Gammanpila said that the agreement to develop the strategic Trincomalee Oil Tank Complex, commonly known as the Trinco Oil Tank Farm, was signed this evening.

He said the signatories were the Treasury Secretary for the Government of Sri Lanka, Land Commissioner General, Ceylon Petroleum Corporation, the local operators of the Indian Oil Company (LIOC) and the newly formed Trinco Petroleum Terminal Ltd.

Gammanpila stressed that 85 of the 99 tanks now will be under the Sri Lankan control which had previously remained under Indian control.

''A new milestone in India-SriLanka economic and energy partnership!!Congratulations to all parties on signing the Agreement to develop Trincomalee Oil Tank Farms. Sincerely appreciate the guidance from leadership of India & Sri Lanka and support from all Ministers and officials concerned," the High Commission of India in Colombo tweeted.

Earlier this week, the Lankan government had said that after reviewing the three existing agreements with the Indian government regarding 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 had said that the joint venture will be for a lease period of 50 years.

The signing has come amid opposition to the deal by nationalist Buddhist monks, opposition groups and petroleum trade unions. Some of them have vowed to move the judiciary to seek an annulment of the deal.

Trade unions at a press briefing here on Thursday claimed that the move would finally facilitate the Indians taking complete control of the tanks.

The new agreement will be an extension of the 2002 agreement with the local operators of the Indian Oil Company, LIOC.

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 comes 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.)