The agreement extending the lease for the oil storage farm will be signed next week after Cabinet approval.
Sri Lanka has agreed to sign a new deal with India to lease the 50-year World War II strategic oil tank farm in the eastern port district of Trincomalee, the energy minister said on Friday, Udaya Gammanpila.
Gammanpila said the agreement will be signed next week after Cabinet approval and is an extension of the 2002 agreement with local operators of the Indian Oil Company, LIOC.
Sri Lanka concluded in 2002 the initial agreement with India on the island’s most strategic oil storage complex, which served as a supply base during World War II.
India had historically shown a strategic interest in the Trincomalee tank fleet that the British rulers had built to supply Allied warships and planes.
“The LIOC will only have control of 14 of the 99 tanks over a 50-year lease,” Gammanpila said, speaking to reporters here.
He said 61 reservoirs out of a total of 99 reservoirs would be operated as part of the joint venture formed between the state oil entity, Ceylon Petroleum Corporation (CPC) and LIOC, with CPC holding the controlling 51% stake.
Gammanpila, who previously said his intention was to regain full control of the tanks, said the new deal was “a triumph for Sri Lanka”.
The deal’s formalization next week will come against the backdrop of Sri Lanka’s request for assistance from India to overcome its current economic woes exacerbated by the ongoing currency crisis in the local economy.
Officials said the island nation had shut down its only refinery over its inability to pay for crude oil and was negotiating a line of credit with India for fuel purchases.