Sri Lanka govt clears deal with India for development of WWII era oil storage tanks

With New Delhi working on a package of financial assistance to bail Sri Lanka out of the economic crisis, President Gotabaya Rajapaksa’s government in Colombo has approved a proposed deal with India to develop most of the World-War-II-era oil storage tanks in Trincomalee on the north-east coast of the island-nation.

The long-awaited breakthrough in the talks between New Delhi and Colombo came just days before Chinese Foreign Minister Wang Yi’s proposed visit to Sri Lanka. The Indian Ocean island is one of the nations where China has been trying to elbow out India to expand its geopolitical influence.

New Delhi is considering a proposal from Colombo for providing two credit lines to Sri Lanka – one of $1 billion to help the island nation import food, medicine and other essential items and another of $ 500 million for the import of petroleum products from India. Besides, New Delhi is also considering an additional $ 400 million currency swap facility to help Sri Lanka tide over the economic crisis caused by the restrictions imposed to contain the Covid-19 pandemic.

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In addition to clearing the proposed deal on the oil storage tanks, the government led by Rajapaksa and his brother and Prime Minister Mahinda Rajapaksa also approved procurement of 750 jeeps for Sri Lanka Police, including 150 jeeps for the Police Special Task Force, from Mahindra and Mahindra Company of India. The jeeps will be purchased utilizing a Line of Credit that India had earlier extended to Sri Lanka. Besides, procurement of 500 32-seater-buses from Ashok Leyland company of India was also approved by the Cabinet of Ministers of the neighbouring nation. The buses will also be procured utilizing a loan grant India earlier offered to Sri Lanka.

The new agreement India and Sri Lanka worked out for joint development of the oil storage tanks, which were built by the British Government during World War II, is based on three existing pacts between the two nations. The Sri Lankan Cabinet of Ministers approved the proposal to allocate 14 oil tanks of the Lower Oil Tank Complex already in use by the Lanka Indian Oil Corporation, a subsidiary of the Indian Oil Corporation, for the company's business activities. It also approved the allocation of the 61 tanks to joint venture company, Trinco Petroleum Terminal Private Limited, with 51% stakes to be owned by the Ceylon Petroleum Corporation and 49% by the Lanka IOC. Besides, 24 of the total 99 tanks will be allocated to the Ceylon Petroleum Corporation.

The breakthrough in talks between New Delhi and Colombo for joint development of the oil storage tanks came just days before the Sri Lankan Finance Minister Basil Rajapaksa is likely to attend Vibrant Gujarat meeting in India. He had earlier visited New Delhi and met Finance Minister Nirmala Sitharaman and External Affairs Minister S Jaishankar to discuss the financial assistance package from India.

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