IOC offers sops to SL to retain storage facility

25 December 2013 03:58 am - 10 - {{hitsCtrl.values.hits}}

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To protect its economic interests amid growing strain in Indian ties with Sri Lanka, state-owned Indian Oil Corp. Ltd (IOC) has proposed to jointly develop a key storage facility in Trincomalee as a petroleum products trading hub that will cater to the demands of the region.

The sop that will help boost the island nation’s economy follows a threat of eviction from the strategic storage facility—the largest one located between West Asia and Singapore. The Sri Lankan government plans to take back 99 oil storage tanks leased by Lanka IOC Plc, an IOC subsidiary that operates 150 retail outlets and has a 43.5% market share.

This threat follows India’s GMR Group last year losing a contract to run the Male airport in the Maldives and comes in the backdrop of Prime Minister Manmohan Singh cancelling his visit to Sri Lanka for the Commonwealth heads of government meeting in November.

“We have made a proposal to them that we can revive some tanks and if the government of Sri Lanka wants we can develop the facility as a trading hub that can cater to the economies of Vietnam, Cambodia and Bangladesh, among others, which import petroleum products,” an Indian government official aware of the development said, requesting anonymity. “They haven’t responded to our proposal which will boost economic activity in that country and earn them revenue. The tanks can be revived in a phased manner.”

Mahishini Colonne, Sri Lanka’s deputy high commissioner to India, confirmed the development. She, however, denied any move to take over the tank farm from IOC.
Sri Lanka was considering taking back 99 oil storage tanks leased to Lanka IOC in the eastern port district of Trincomalee in 2002, news agency Press Trust of India reported on Friday.

The report quoted Lankan President Mahinda Rajapaksa, who in his budget speech as finance minister told Parliament: “Our oil storage tanks located in Trincomalee were privatized. We are currently having talks to take them back.”

The Indian Prime Minister cancelled his trip to Sri Lanka due to pressure from Tamil parties in India. Tamils in India, who share close cultural ties with Sri Lankan Tamils, are upset with Sri Lanka’s majority Sinhala community for alleged atrocities committed during the last phases of the civil war.
Queries emailed to IOC, India’s foreign and petroleum ministries on Monday remained unanswered.

IOC’s attempt to soften Sri Lanka’s stand, if accepted, will help cater to the island’s market as well as the country’s revenue by catering to other economies. The China Bay Tank farm has 99 storage tanks having a capacity of 12,000 kilolitres each. Currently, only 15 of these tanks are operational.

“The proposal is pending with them. It is a good location. With Sri Lanka being an importer, more storage tanks can be revived. Our agreement for using these tanks is for a long period of time. However, as a sovereign government, they can exercise their right,” said the official quoted earlier.

Indian efforts to step up energy diplomacy by engaging with Myanmar, Bangladesh and Sri Lanka aren’t having the desired results, while Chinese presence has been stepped up in the island nation. Chinese firms are building Sri Lanka’s Hambantota port, an ambitious project that will service the busy east-west shipping route.

“IOC is working with our authorities for developing the facility as a joint venture on the similar lines to what NTPC Ltd has done. A similar arrangement has been talked about,” Colonne said. “It is under discussion. It will take some time.”

Indian state-run power utility NTPC Ltd is setting up a 500 megawatt plant in Sri Lanka with the Ceylon Electricity Board.
Sri Lanka’s three-decade-long civil war ended in May 2009 with the defeat of the rebels who were fighting for a separate homeland for the minority Tamils who constitute some 14% of the country’s 20 million population. Human rights groups say upto 40,000 civilians were killed in the final months of the Sri Lankan government’s military campaign.

India has been leaning on Sri Lanka to speedily integrate Tamils into the political mainstream. India also voted against Sri Lanka in the United Nations Human Rights Council hearings in Geneva on 21 March over the alleged war crimes.

Lanka IOC, which retails petroleum products as well as supplies them in bulk to industrial consumers, competes with Ceylon Petroleum Corp., which has 1,070 retail outlets in the country.(Livemint)

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Comments - 10

ICC Wednesday, 25 December 2013 04:26 AM

35% Tamils 75% singalis = 100 % sri lankans

Madhura Wednesday, 25 December 2013 04:40 AM

No joint ventures with India please. SL should not get caught to these long planned traps.

Ajithkumar Wednesday, 25 December 2013 07:20 AM

The Maldivian Government might have to face the consequences for cancelling the GMR Contract. They exercised their sovereignty card. But the case is in arbitration in Singapore,and GMR is expecting compensation of more than a Billion Dollar, (almost close to 10% of the Maldivian budget) which if they win, had to be born by the Maldivian Citizen Same goes with IOC. Its end of the day, the citizens who are bombarded for all the worst decisions taken by the leaders.

Sujith Wednesday, 25 December 2013 10:21 AM

Lets not make any long term commitment with India , We need to play cards safely as we dont have many.

Dan Wednesday, 25 December 2013 12:58 PM

Hope Sri Lanka will act wisely while dealing with fair weather friends.

Vic Wednesday, 25 December 2013 03:10 PM

Yeah, Pakistan will be my choice.

chennai guy Thursday, 26 December 2013 12:00 AM

No offence, but china cant be trusted, id suggest the govt does not rely on anyone! Every country has its hidden agenda. Do it 100% lankan.

chennai guy Thursday, 26 December 2013 12:00 AM

No offence, but china cant be trusted, id suggest the govt does not rely on anyone! Every country has its hidden agenda. Do it 100% lankan.

Shehan Thursday, 26 December 2013 02:41 AM

I agree. SL should stop relying on India and start making strategic decisions for our own economic interests.

Randeniya Banda Thursday, 26 December 2013 06:34 AM

Outright rejection of any Indian overtures is the best policy that GOSL can adopt. GOSL must listen to the voices of Sri Lankan citizens, not the Indian businessmen.

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IOC offers sops to SL to retain storage facility

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