Colombo, October 25 (The New Indian Express): Differences between India and Sri Lanka over the Trincomalee oil storage tanks persist, despite the three day visit of the Indian Foreign Secretary, S.Jaishankar, which ended on tuesday.
Reliable sources said on Tuesday that the basic “technical and legal issues” which have been preventing the full use of the giant oil tanks remain unresolved though the tanks were handed over to the LIOC ,a subsidiary of IOC ,way back in 2002 for joint development with the Ceylon Petroleum Corporation (CPC).
“These are long standing problems which cannot be solved soon,” an official said.
Because of the war in North-East Sri Lanka, LIOC and CPC could not develop the tanks as desired though the LIOC, PRIMA and the Sri Lanka Air Force were using some. The LIOC had renovated 15 of the 99 tanks at a cost of US$ 15 million and was ready to invest US$ 17 more for further refurbishment. The PRIMA wheat company and the Air Force were using four.
The end of the war in 2009 did not being any relief as relations between India and the Mahinda Rajapaksa government deteriorated over the Tamil issue. In 2013, India abstained from supporting Sri Lanka in the UN Human Rights Council, and Prime Minister Manmohan Singh did not attend the Commonwealth summit held in Colombo.
Given the downturn in relations, the Rajapaksa government unofficially said in 2013, that it might ask the LIOC to quit because the original agreement was not entered into in a proper manner and that the land on which the tanks stood had not been handed over to LIOC legally. And the CPC had no authority to give permission to the LIOC to use the tanks because the CPC did not own the tank farm, which was government property. LIOC was also paying only a nominal fee for the use of the tanks.
However, the government of India unofficially warned Sri Lanka that the IOC-CPC deal was the result of the India-Sri Lanka Accord of 1987 and was a government to government agreement which cannot be unilaterally abrogated. The Sri Lankan government thereafter stopped talking of a takeover but full development of the tanks did not proceed as originally envisaged.
But India was keen on participating in the energy sector in Sri Lanka and had an eye on Trincomalee for development as an Indian Ocean energy hub.
The tank farm consisting of 99 tanks is located on an 850-acre block of land. Each of the tanks has a holding capacity of 12,100 metric tons of oil. The total storage capacity is about one million metric tines.
After the change of government in Sri Lanka in January 2015, Prime Minister Ranil Wickremesinghe took the proposed an India-Sri Lanka joint venture to develop 30 storage tanks in the first phase. The Government proposes to establish a new venture between Lanka IOC and the Ceylon Petroleum Corporation (CPC) to develop the 84 tanks located within the Trincomalee Upper Tank Farm. However, the resoration will cost a lot of money.
The Minister of Petroleum, Chandima Weerakkody, told Parliament that CPC had said that nine could be used after minor repairs. Government wants to increase the total storage capacity to 90,000 MT, enabling it to benefit from the global oil price fluctuations.
However, technical and legal issues relating to the on-going joint venture with the LIOC still persist preventing the implementation of plans of the governments of India and Sri Lanka.
