Colombo: Sri Lanka on Thursday signed an agreement with the local unit of Indian Oil corp, Lanka IOC, to lease 75 oil tanks as the island moves closer to securing a $500 million fuel credit line from India.
The signing of the deal comes ahead of Chinese Foreign Minister Wang Yi’s visit to Colombo later this week, with China also competing to dominate Sri Lanka.
Sri Lanka is facing its worst financial crisis in decades, with its forex reserves dwindling and debt repayments of about $4.5 billion in 2022 prompting it to look at new ways to bring in foreign exchange.
Earlier in 2003, Sri Lanka had agreed to lease all its 99 tank oil farms to India.
As per the new agreement, Lanka IOC will have 14 tanks on a 50-year lease, while state-run Ceylon Petroleum Corporation (CPC), its joint venture with Trinco Petroleum Terminal, will develop 61 oil farms. The remaining 24 tanks will be used by CPC.
Sri Lanka’s Energy Ministry said in a statement on Thursday, “This agreement will cancel the lease agreement signed by the two countries in 2003 and bring the tank farm under a new governance framework.”
Prior to Thursday’s agreement, the Lankan IOC was operating 15 of the 99 storage tanks in the eastern port of Trincomalee.
The Sri Lankan government was considering developing the rest to increase its fuel storage capacity.
Prime Minister Narendra Modi During a visit to Sri Lanka in 2019, he said that the project could help the island become a regional petroleum hub.
Successive Indian and Sri Lankan governments have been attempting to split ownership and development of a World War II-era tank farm in Trincomalee since 1987, a strategically important port off the island’s scenic east coast.
Sri Lanka lies on a shipping route between Gulf oil exporters and Asian consumers, and Trincomalee served as an important Allied supply center during World War II.
The signing of the deal comes ahead of Chinese Foreign Minister Wang Yi’s visit to Colombo later this week, with China also competing to dominate Sri Lanka.
Sri Lanka is facing its worst financial crisis in decades, with its forex reserves dwindling and debt repayments of about $4.5 billion in 2022 prompting it to look at new ways to bring in foreign exchange.
Earlier in 2003, Sri Lanka had agreed to lease all its 99 tank oil farms to India.
As per the new agreement, Lanka IOC will have 14 tanks on a 50-year lease, while state-run Ceylon Petroleum Corporation (CPC), its joint venture with Trinco Petroleum Terminal, will develop 61 oil farms. The remaining 24 tanks will be used by CPC.
Sri Lanka’s Energy Ministry said in a statement on Thursday, “This agreement will cancel the lease agreement signed by the two countries in 2003 and bring the tank farm under a new governance framework.”
Prior to Thursday’s agreement, the Lankan IOC was operating 15 of the 99 storage tanks in the eastern port of Trincomalee.
The Sri Lankan government was considering developing the rest to increase its fuel storage capacity.
Prime Minister Narendra Modi During a visit to Sri Lanka in 2019, he said that the project could help the island become a regional petroleum hub.
Successive Indian and Sri Lankan governments have been attempting to split ownership and development of a World War II-era tank farm in Trincomalee since 1987, a strategically important port off the island’s scenic east coast.
Sri Lanka lies on a shipping route between Gulf oil exporters and Asian consumers, and Trincomalee served as an important Allied supply center during World War II.
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