Finance Minister Basil Rajpaksa Discusses Potential New Investment for Trincomalee Oil Tank Farm in New Delhi Talks but Energy Minister Udaya Gammanpila Says he is not aware of the fresh discussions held in India

By Maheesha Mudugamuwa

Yet another important national asset of the country, the oil tank farm in Trincomalee, was leased out to Lanka Indian Oil Company (LIOC) in 2003. Recently, it has been marred in controversy, with possible new investments discussed during Finance Minister Basil Rajapaksa’s recent visit to India.
As learnt by The Sunday Morning, the new discussion had been initiated by Minister Rajapaksa, while another discussion initiated between India and Sri Lanka nearly 15 months ago was still underway.

It was further learnt that the Finance Minister had been unaware of the earlier discussion when he, during his recent visit, initiated the new discussion.

The Trincomalee Oil Tank Farm had been leased out to the LIOC by way of an agreement since 2003 on a 35-year lease, which is set to expire in 2038. Altogether, 99 tanks have been leased out. The farm initially had 101 tanks built within an area of 850 acres, however, two of the tanks were destroyed; one in a Japanese Air raid in 1942, and the other when a plane accidentally crashed into the area in 1960. The tanks, whose initial construction commenced in 1924 and ended in 1930, fell into disuse following Independence. The LIOC has refurbished 15 of the tanks in the lower tank farm, which are now in use. Collectively, the tanks in operation are able to hold up to 1.2 million tonnes of fuel.

As the nature of the new investment is yet to be revealed to the public, The Sunday Morning contacted Energy Minister Udaya Gammanpila to see whether he was aware of the new discussions and whether there was a positive update on the discussions that were initiated earlier, by him.

“I have been appointed as the sole negotiator on behalf of the Government of Sri Lanka (GoSL) by the Cabinet of Ministers. We have held negotiations for the last 15 months. Both sides are very patriotic towards their motherlands, and as a result, the progress is very slow,” Gammanpila told The Sunday Morning.

“I didn’t have the opportunity to brief Minister Basil Rajapaksa before his departure to India. I’m not aware of the discussions held with the Indian Government apart from the contents of the media release,” he added.

Nevertheless, prior to the recent development, several previous attempts that have been made by Sri Lanka to reclaim the oil tank farm, or at least to use the remaining oil tanks, had proven futile.

For example, the then Sri Lankan Government proposed the idea of developing and running the tanks as a joint venture in 2016 to store fuel for power generation in an emergency situation. However, this joint venture proved unsuccessful and the operation of the tanks was delegated solely to the LIOC.

The previous Government signed a Memorandum of Understanding (MoU) on Co-operation on Economic Projects, and decided to set up a joint venture between the LIOC and the Ceylon Petroleum Corporation (CPC). According to the agreement signed in the presence of Indian Prime Minister Narendra Modi and then Sri Lankan Prime Minister Ranil Wickremesinghe in 2017, India had agreed to the Sri Lankan proposal to refurbish and use the 84 giant oil tanks in the upper tank farm as a “joint venture”.
Consequently, by abandoning the measures taken by the previous Government, the present Government initiated fresh rounds of talks with India and the LIOC, which have been ongoing for months.

Reportedly, India had offered support to Sri Lanka on four pillars, including the early modernisation of the Trincomalee Oil Tank Farm, during the two-day official visit, where Minister Rajapaksa had two rounds of joint discussions with his counterpart and External Affairs Minister Dr. Subrahmanyam Jaishankar. He had also met with the Minister for Petroleum and Natural Gas Hardeep Singh Puri and the National Security Advisor of India Ajit Kumar Doval.

In such a backdrop, the new initiative had raised concerns among the energy trade unions, as they stressed that the country was yet to gain a positive solution.

Speaking to The Sunday Morning, Energy Trade Union (ETU) Convener Ananda Palitha noted that there was an ongoing court case filed by the trade unions on the basis that the lease agreement between the LIOC and CPC was illegal, and that therefore, the Government should re-acquire the oil tank farm.
“We want the Government to expedite the legal procedure. So, if the court says that the agreement is illegal, the tank farm is with us. If it (the agreement) is legal, we can re-acquire it in 2038, once the agreement expires,” he explained.

However, Palitha urged the Government not to take quick decisions over the tank farm and re-enter new agreements, as they should first seek legal advice over whether the agreement was legal or not.

Furthermore, he stressed that a decision over the tank farm should only be taken after considering the court’s decision.
Meanwhile, LIOC Managing Director Manoj Gupta told The Sunday Morning that discussions were heading towards a positive direction.

“These are very sensitive issues, and discussions are going on a very positive, healthy note. Going forward, we should have the updates very soon,” he added.

Attempts to contact Minister Basil Rajapaksa and Treasury and Finance Ministry Secretary S.R. Attygalle were futile.

Courttesy:The Morning