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Sri Lanka and India to Sign Memorandum of Understanding for “Cooperation in Economic Projects” With Spotlight on Trincomalee

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Sri Lanka and India will jointly make investments to develop the Trincomalee Port and establish a petroleum refinery and other industries there. They will also encourage Indian companies to invest in a Container Terminal in the Port of Colombo.

These are highlights of a Memorandum of Understanding to be signed this year between Sri Lanka and India for “cooperation in economic projects.”

For Sri Lanka, the “focal points for effective implementation,” the MoU notes will be the Ministry of Development Strategies and International Trade. The Indian counterpart is yet to be identified.

The final draft of this MoU has been approved by the Cabinet Committee on Economic Management (CCEM) which is chaired by Prime Minister Ranil Wickremesinghe. It now awaits the formulation of a ‘road map’ for implementation by an official committee. The MoU reaffirms the “traditionally close and friendly relations between the two countries and their continuing endeavours to enhance bilateral relations through increased economic, investment and development co-operation for the mutual benefit of their people.”

The MoU says the objective is “to achieve greater economic, investment and development cooperation in a progressive manner, through joint ventures and other cooperative activities that ensure the wellbeing of the people of the two countries on the basis of equality and mutual benefit.”

The “areas of scope and cooperation” incorporate the mutual agreement both Colombo and New Delhi have reached on the different projects. They are:

• To set up a Liquefied Natural Gas (LNG) fired 500 Megawatts capacity LNG Power Plant as well as LNG Terminal/Floating Storage Regasification Unit (FSRU) in Kerawalapitiya.

• India to assist Sri Lanka in the enhanced usage of Natural Gas including the setting up of piped gas distribution system in Colombo and in suburban areas in Sri Lanka; retail outlets for the supply of Compressed Natural Gas (CNG) to the transportation sector in Sri Lanka; and conversion of fuel-based power plants to LNG power plants, jointly with the Ceylon Petroleum Corporation (CPC).

• To set up a 50 MW (extendable to 100 MW) Solar Power Plant in Sampur.

• To form a Joint Venture to develop the Upper Tank Farms in Trincomalee, while signing a land lease agreement for 50 years in favour of Lanka Indian Oil Corporation (LIOC) Ltd. for the Tank Farm.

• To make joint investments in the development of Port, Petroleum Refinery and other industries in Trincomalee.

• To carry out a Feasibility Study on the proposed Petroleum Refinery Joint Venture by Ceylon Petroleum Corporation and the Indian Oil Corporation referred to above.

• To set up Industrial Zones/Special Economic Zones in identified locations in Sri Lanka.

• To develop Dambulla-Trincomalee road as an Expressway through joint investments by India and Sri Lanka.

• To develop roads in Sri Lanka including Mannar-Jaffna and Mannar-Trincomalee highways.

• To develop railway sector in Sri Lanka including new projects of track upgradation and purchase of rolling stock, and

• To encourage Indian companies to invest in a Container Terminal in Colombo Port, considering that majority of transhipment in Colombo Port is related to India.

Provision has been made in the MoU to amend or supplement provisions by the two sides agreeing to them in writing. Whilst disputes are to be settled “through mutual consultations,” either side would be entitled to terminate the agreement by giving three months’ notice.

One of the significant ventures is the joint project to develop the World War II vintage oil storage tanks. Built by the British, the 99 tanks in 850 acres, each with a capacity of a million gallons, remain in good order. Of the 101 tanks, one was destroyed in 1942 when a Japanese kamikaze bomber dived into it.

Another was damaged in 1960 when an Air Force aircraft crashed on it. Lanka-India Oil Corporation (LIOC) has been using 15 tanks, facing the sea area, for petroleum storage. It operates a string of fuel stations countrywide.

Courtesy:Sunday Times

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