Sri Lanka cancels Indian oil storage, port deals

Sri Lanka has cancelled oil storage and port deals with India in the latest blow to Delhi's efforts to strengthen relations with its neighbours.

The Sri Lankan government said this week that it will cancel a lease on oil storage tanks in the eastern port district of Trincomalee that was awarded to India's biggest refiner state-controlled IOC.

Colombo [leased 99 tanks to IOC]( https://direct.argusmedia.com/newsandanalysis/article/1504942) for 30 years from 2003, with the refiner also allowed to take a 33pc share in Sri Lanka's state-run Petroleum Storage company. But the government has now taken over the tanks, citing opposition from trade unions to India's participation.

The government gave the same explanation for its decision earlier this month to cancel a trilateral deal with India and Japan to develop the eastern container terminal at Colombo Port. The three countries had agreed on the project in May 2019. The port development will now be solely run by Sri Lanka.

The decisions by the government of prime minister Mahinda Rajapaksa are a snub to Delhi, even after Sri Lanks received 500,000 Covid-19 vaccine doses from India last month as part of a vaccine diplomacy drive that India hopes will boost ties with its neighbours.

Cracks in India's relations with Sri Lanka re-emerged after the Rajapaksa family, who have ties to China, returned to power in 2019.

India's BJP government led by prime minister Narendra Modi has overseen a deterioration of relations with its neighbours. A rift with India over its constitution led India to halt oil product exports to Nepal in 2015. A controversial 2019 citizenship bill that was seen as discriminating against Muslims also alienated Bangladesh and gave an opening to China to expand its presence in south Asia. And this month's military takeover in Myanmar (Burma) may also allow Beijing to increase its influence in the country at the expense of Delhi.