Indian Prime Minister Narendra Modi, who will be arriving in Sri Lanka to attend the UN ‘Vesak Day’ celebration following an invitation extended by the government, will not be signing any agreements during his visit, sources from India told Ada Derana.
During Prime Minister Ranil Wickremesinghe’s recent visit to New Delhi, several key memorandums of understanding (MoUs) between the two countries were signed. The agreement reached with regard to the Trincomalee oil tanks had reportedly taken priority during this.
According to the said MoU, it has been proposed that 99 oil tanks in Trincomalee will be developed as a joint venture between India and Sri Lanka.
In 2003, the Sri Lankan government, the Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Company (IOC) entered into a tripartite agreement over the Trincomalee oil tank farm.
In accordance with that agreement the CPC handed over the 99-tank complex to Lanka IOC on a 35-year lease. Lanka IOC has been paying the government an annual rental to the tune of US$ 100,000.
Despite Lanka OIC having exclusive rights for the development of the upper tank farm at Trincomalee, as per the agreement, India and Sri Lanka agreed to jointly develop the complex in March 2015.
During the recent visit of PM Ranil Wickremesinghe to India, the two countries entered into an MoU for cooperation in economic projects, which covered several investments for development including the Trincomalee tank farm.
According to sources, the joint venture between the Lanka IOC and the CPC will be set up by the end of July this year and business development proposals will be compiled by the joint venture company by September 2017.
The source also conformed to Ada Derana that both India and Sri Lanka have agreed to develop the facility for international oil storage as an equal share venture. India has expressed willingness to fund the entire project.
As per the business development plans, the joint venture company between CPC and Lanka IOC will develop all 99 tanks of the complex out of which the development of 10 oil tanks will be prioritized. According to the new agreement, the 10 oil tanks will be for the exclusive use of the Sri Lankan government, the source said.
Pursuant to the 2003 agreement, the land of the upper tank farm which is in the possession of the Lanka IOC will now be leased to the joint venture company by the LIOC. Meanwhile the land of the lower tank farm which is also occupied by Lanka OIC will be directly leased to the joint venture company.
The period of the entire lease as per the agreement will be 50 years.
Workers of Sri Lanka’s state-run petroleum company last week held a strike to protest the proposed deal with India to jointly operate the strategic oil facility.
