
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 refueling 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 kiloliters 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.