Sri Lanka, India to jointly develop Trinco oil tanks

The Sri Lankan cabinet has approved a proposal to jointly develop the Trincomalee oil tank farm with India, a deal that is likely to strengthen India-Sri Lanka diplomatic relations.

The two countries agreed to jointly develop and operate the farm, which consists of 99 tanks, over three decades ago but the entire farm was leased to India in 2003 for 35 years and Sri Lanka was unsuccessful in taking part of the farm as a sublease from Indian state-controlled IOC's subsidiary Lanka IOC (LIOC) in 2017.

"After reviewing the three existing agreements with the Government of India regarding the Trincomalee Oil Tank Complex through diplomatic talks, the two countries have reached an agreement to implement a joint development project. Accordingly, the Cabinet of Ministers approved proposal presented by the Minister of Power," the cabinet said in a statement.

Sri Lanka's energy minister Udaya Gammanpila recently said that as per the new agreement, 24 tanks will be given directly by his government to state-run Ceylon Petroleum Corporation (CPC) and will be removed from the commitment to jointly develop with India.

The 14 tanks presently used by LIOC will be leased to them for 50 years, while the 61 remaining tanks will be jointly developed and managed by CPC and LIOC under a joint venture called Trinco Petroleum Terminal, he added.

CPC will hold a 51pc stake in the joint venture, while LIOC will hold 49pc. The cost of the project and the timeline were unavailable.

By Sathya Narayanan