Sri Lanka had agreed to sign a new deal with the Indian government to lease out one of its strategically important World War II era oil tank farms for 50 years in the eastern port district of Trincomalee.
Sri Lanka’s Energy Minister, Udaya Gammanpila told reporters on Friday that the deal will be signed next week after getting clearance from the Sri Lankan Cabinet and in an extension of the 2002 agreement with the local operators of the Indian Oil Company, Lanka IOC, which is under the ownership of Ministry of Petroleum and Natural Gas, Government of India.
The island nation’s most strategically important oil storage complex, located in Trincomalee, was used as a supply base by the British forces in the Asian war theatre during World War II. Since 2002, the complex has been leased to the Indian group. Since the 1950s, India had shown strategic interest in the Trincomalee tank farm, which the British had built and maintained since the 1920s to refuel warships and aircraft.
Speaking in detail about the condition of the contract, the minister added, “The LIOC will have the control of just 14 of the 99 tanks over a 50-year lease, 61 tanks out of the total number of 99 tanks would be run under the joint venture company formed between the state oil entity, Ceylon Petroleum Corporation (CPC) and the LIOC with CPC holding the majority 51% stake.”
In the coming weeks a formal agreement process will commence. The deal is a win-win situation for both countries as Sri Lanka is seeking India’s help to tide over its current economic woes exacerbated by the ongoing foreign exchange crisis, that had forced the island nation to shut its only refinery as it was not able to pay for crude oil and was negotiating a credit line with India for fuel purchases. For India, which had to compete with China’s growing assertiveness in South Asia, the deal is good news as Sri Lanka is always strategically and geographically important in the theatre of Asian and Indo-Pacific geopolitics.