Colombo, January 1 (newsin.asia): Sri Lanka appears poised to regain control over a majority of the 99 oil tanks in the Trincomalee Oil Tank Farm which were given to India by a government-to-government agreement in February 2003.
The Lankan Minister of Energy, Udaya Gammanpila, told the media here on Friday that Sri Lanka and India have, at the officials’ level, agreed to enter into a new deal to manage the giant World War II-vintage oil tanks in Trincomalee in Eastern Sri Lanka. Each tank can hold 12,000 mt of oil.
The Minister said that the State-owned Ceylon Petroleum Corporation (CPC) will get 24 tanks to develop and use independently of the Lanka Indian Oil Corporation (LIOC); 14 of the tanks, currently used by the LIOC, will be leased to the LIOC for 50 years; and the balance of 61 tanks will be managed by the Trinco Petroleum Terminal Ltd.,(TPTL) a joint venture of the CPC and LIOC to be launched soon. In the TPTL, the CPC will own 51% of the shares and the LIOC will hold 49%. The TPTL will be a subsidiary of the CPC.
In effect, 85 out of the 99 tanks will be under the control of the CPC directly or indirectly. And the LIOC will manage only 14 tanks, Gammanpila said.
He then triumphantly added: “Regaining control of the Trinco Oil Tank Farm by Sri Lanka is a historical victory.”
Awaits Cabinet Nod
However, the draft deal will have to be presented to the Sri Lankan cabinet on January 3 and its approval secured, he added.
“I will present a paper on the deal at the cabinet meeting on January 3. If the cabinet approves it, I will go to the tanks with a party of Lankan officials to plant the Sri Lankan national flag to mark the historic event,” Gammanpila said.
The Minister said that the Indian delegation negotiating with him is headed by the Deputy High Commissioner, Vinod K. Jacob.
Tracing the history of the controversial tank farm issue, Gammanpila said that by the India-Sri Lanka Accord of July 29, 1987, the two countries were to jointly develop the tanks. India’s interest in these 99 tanks, each of which could hold 12,000 metric tons of oil, was more strategic than economic. India was wary about the tanks going into the hands of countries inimical to India. It therefore desired the development of the tanks by an Indo-Lankan joint venture.
However, no joint venture was formed and the unused tanks continued to gather dust. But on February 7, 2003, the Ranil Wickremesinghe government handed over all the 99 tanks to India on a 35-year lease. The Lanka Indian Oil Corporation (LIOC), a subsidiary of the Indian Oil Corporation (IOC), developed some tanks and has been using 14 of them since then after refurbishing them at a cost of US$ 1 million per tank. As a lease payment, LIOC has been giving US$ 100,000 per year.
In 2017, when Ranil Wickremesinghe was back in power as Prime Minister, an attempt was made by his government to take a part of the tank farm on lease from the LIOC. But this move was unsuccessful.
Asked if the CPC, which is a loss-making public sector undertaking, has the money to refurbish the tanks it will take over, the Minister said that all the tanks will not be refurbished and used at one go. It will be done step by step and added that the cost of refurbishment per tank, is not unbearable.
“It costs US$ 1 million per tank, and that is affordable,” he said.
Asked if the renovated tanks can be used at this juncture, given the dire state of the Sri Lankan economy, Gammanpila said that the tanks can be used to store non petroleum products also. They can also be rented out to parties which want storage space, as so many countries do. They can be used to store oil purchased when the international prices go down.
The take-over of the tanks will see some political drama apart from the hoisting of the Sri Lankan national flag. Gammanpila recalled that in December 2016, the Sri Lankan cabinet decided to repair 10 tanks of the farm for storage. Accordingly, five officers of the CPC, led by Mr.Menaka Jeewasiri, entered the premises after giving notice, on 29, December 2016 to examine the condition of the tanks. But they were detained by the LIOC which claimed unlawful entry. India conveyed its displeasure over the incident through diplomatic channels.
“ But we will end this dark period soon,” Gammanpila said. “I will enter the tank farm premises along with the officers who were subject to harassment. I will hoist the national flag there. Sri Lankans have been receiving only pessimistic news in the recent past. Hence, we will be happy to deliver this joyful message to the patriotic people of Sri Lanka.”
Asked if this will not irk India at a time when Sri Lanka is pressing it to give financial assistance to tide over the current dollar crunch, and is also seeking US$ 500 million credit to buy oil of which there is a shortage, Gammanpila said that Sri Lanka is only asking for its rights as the owner of the tanks. He also said that US$ 500 million is a small amount in the light of the fact Sri Lanka imports oil to the tune of US$ 3.5 billion.
Sources in India said that New Delhi has always been ready to have a joint venture to run the tanks and point out that was stated in the annexure to the India-Sri Lanka Accord of 1987. Also, India now understands, after several attempts made by successive Sri Lanka governments to take over some of the tanks, that the Sri Lankan sentiment has to be accommodated in the interest of bilateral relations, especially in the present context in which China is wooing Sri Lanka with massive development assistance.
India also feels that there is scope for refurbishing more tanks as the Sri Lankans could use them to store oil bought when prices went down in the international market.
There is a local nationalist factor to be addressed. The Gotabaya Rajapaksa government is a nationalistic one. It openly serves the nationalistic section of the majority Sinhalese Buddhist community. Buddhist monks and trade unions have been demanding the nationalization of the tanks for long. President Mahinda Rajapaksa told parliament in 2013, that the tanks could be nationalized. Minister Gammanpila himself is a hardcore nationalist belonging to the Pivithuru Hela Urumaya party that has been an ally of Rajapaksa governments.
Security Assurance to India
There are indications from the Sri Lankan government that in view of the security concerns India has vis-a-vis the oil tanks, Colombo will give a “written assurance” that nothing will be done in regard to the tanks which will endanger India’s security.