What is Trincomalee oil tank farm deal?

Sri Lanka is soon going to ink the long-dragging deal with India for jointly develop the ‘Trincomalee oil tank farm’.

Highlights

• Trincomalee oil tank farm deal is a coveted project, that has remained controversial since long time.

• India and Sri Lanka have been negotiating this project for 16 months.

• For this purpose, Sri Lanka’s Energy Minister Udaya Gammanpila has instructed the Ceylon Petroleum Corporation (CPC) to form a subsidiary company called Trinco Petroleum Terminal Ltd.

• This move follows President Gotabaya Rajapaksa’s approval on setting up a special purpose vehicle.

Background

British had built the “Trincomalee Oil Tank Farms” during the Second World War, to serve as a refuelling station. It was built adjacent to the Trincomalee port, which is an enviable natural harbour. However, the century-old oil tanks need to be refurbished to be fit for use again, at the cost of millions of dollars. The proposal to refurbish the oil farm was envisaged 35 years ago, in the Indo-Lanka accord. This accord states that, “work of restoring and operating the Trincomalee oil tank farm will be undertaken by India and Sri Lanka, as a joint venture”. Despite this Accord, work barely moved until 2003. In 2003, Indian Oil Corporation set up its Sri Lankan subsidiary called Lanka IOC.

About Trincomalee Oil Tank Farm

The Trincomalee Oil Tank Farm is located in ‘China Bay’. It comprises of 99 storage tanks, with a capacity of 12,000 kilolitres each, spread across Lower Tank farm and Upper Tank Farm. Currently, Lanka IOC runs 15 tanks. The new agreement is being negotiated for the remaining tanks.  Indian Oil Corporation will work with the Ceylon Petroleum Corporation for developing the Upper Tank Farm.

Month: Current Affairs - December, 2021