Colombo/New Delhi,(UNI): Prime Minister Narendra Modi on Friday conveyed New Year greetings to Sri Lankan President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, as the two countries firmed up an agreement to develop the Trincomalee Oil Tank Farms, paving the way for Colombo to receive an estimated $1.5 billion credit from New Delhi to boost its battered economy.
A day after the two countries inked an agreement in Colombo to develop the Trincomalee Oil Tank Farms of World War II vintage, the Indian High Commission in Colombo tweeted news of Prime Minister Modi exchanging New Year greetings with the Sri Lankan leadership.
“PM @narendramodi conveyed Best Wishes for the New Year to H.E President @GotabayaR and H.E PM @PresRajapaksa,” it said in a tweet.
The development comes as Chinese Foreign Minister Wang Yi landed in neighbouring Maldives on Friday as part of his visit to Male and Colombo, in a sign of Beijing’s determined push to expand its clout in the geopolitically strategic Indo-Pacific region.
Wang’s visit also comes amidst strain in ties between Beijing and Colombo over a rejected shipment of Chinese fertiliser.
On Thursday evening, as India and Sri Lanka inked the Trincomalee agreement, Indian External Affairs Minister S Jaishankar spoke on the phone with his Sri Lankan counterpart GL Peiris, and conveyed that India is a reliable friend and “will support Sri Lanka in these difficult times”.
The two sides signed the documents in Colombo to jointly develop the Trincomalee Tank Farms (TTF).
This is an important step towards modernization of TTF, which also featured among the four pillars of economic cooperation discussed during the visit of Sri Lankan Finance Minister Basil Rajapaksa to New Delhi in early December 2021, sources said.
Cooperation in energy security is an important area of bilateral cooperation between India and Sri Lanka under India’s ‘Neighbourhood First’ policy and ‘SAGAR’ doctrine.
The signatories include Government of Sri Lanka, Lanka IOC (LIOC) – an arm of Indian Oil Corporation, Sri Lanka’s state-run Ceylon Petroleum Corporation (CPC) and the Trinco Petroleum Terminal Ltd (a joint venture between Ceylon Petroleum Corporation and Lanka IOC).
As per this understanding, 16 tanks of the Lower Tank Farm (which have already been developed by LIOC) will be leased to LIOC; 61 tanks in the Upper Tank Farm to the Trinco Petroleum Terminal; and 24 tanks in the Upper Tank Farm to the CPC.
Suitable provisions exist in the agreements to protect investment, the sources added.
While the understanding to jointly develop the Trincomalee oil storage facility is rooted in the 1987 Indo-Sri Lanka Accord, the storage facility at TTF could be developed only in a very limited way so far due to absence of lease which was to be signed within six months of Agreement among GOSL, LIOC and CPC in 2003.
Thursday’s development is another significant step in broadening the spectrum of our mutually beneficial economic partnership. It will also assist Sri Lanka in the development of Trincomalee as an energy and transport hub to further bolster its energy security, the sources said.
This understanding is another good example of our desire to foster win-win cooperation between the two countries, and their public and private sectors.
India looks forward to full implementation of bilateral understandings reached within agreed timelines, said the sources.
According to Sri Lankan media reports, Colombo had asked for a US$400 million swap from the Reserve Bank of India, a US$500 million petroleum credit likely from the Exim Bank of India and a US$one billion food and medicines credit during the visit of Basil Rajapaksa to India in December.
As part of the agreement, the two sides set up Trinco Petroleum Terminal Ltd, a joint venture, that is a subsidiary of the Ceylon Petroleum Corporation.
The CPC will hold 51 percent controlling stake in Trinco Petroleum Terminal Ltd, with Lanka IOC, a subsidiary of Indian Oil Corporation, owning the remaining 49 percent.
The chairman of the joint venture company, as well as four out of its seven board members will all be appointed by the CPC, according to Sri Lankan Energy Minister Udaya Gammanpila.
The company will be subject to government scrutiny and can be questioned by parliament committees, he said.
“It will be very much part of the state machinery,” he said.
Gammanpila told reporters in Colombo that as a result of the new agreement with India, 85 out of the 99 tanks will be under the control of the CPC, 24 directly and 61 through the joint venture subsidiary.
“The LIOC will manage only 14 tanks. Therefore, regaining the control of Trinco Oil Tank Farm by Sri Lanka is a historical victory,” the Minister said.
The oil tank farm issue is a sensitive one in Sri Lanka with the opposition alleging that the country’s assets are being given away.
Besides the 14 tanks that have been under Lanka IOC, the remaining 85 tanks are reported to be in a state of disrepair. The agreement between CPC and LIOC will be for the renovation and development of these 85 oil tanks.
The WWII vintage tanks are constructed across an area of 827 acres and each tank can hold 10,000 MT of fuel.
