The Indian co will submit a proposal on the JV structure

Indian Oil Corporation (IOC) and Ceylon Petroleum Corporation (CPC) are set to form a joint venture (JV) for taking up various initiatives in the oil and gas sector, including supply of LNG to Sri Lanka by Petronet LNG Limited (PLL) to feed power plants in that country.

The decision to form the joint venture was taken following a meeting between the Petroleum Secretary, Vivek Rae, and the Ministry of Finance and Planning and Secretary, Ministry of Economic Development, Sri Lanka, P. B. Jayasundara, recently. Seeking to put the co-operation in the oil and gas sector on the fast track, the government has asked IOC to formalise a proposal within this month, and submit the same to CPC to facilitate further discussions.

While acknowledging that there were pending issues of Lanka IOC, the Sri Lankan side suggested that the best way forward was to carry the initiative for enhancing co-operation between the two countries. It was decided during the meeting that IOC would submit a comprehensive proposal on the structure of the proposed JV that would address all concerns of IOC.

Mr. Rae informed his counterpart that the earlier proposal of IOC for setting up a new refinery in Sri Lanka was not found to be viable in view of sub-optimal size of the refinery. Therefore, IOC had offered to render its services for revamp of the existing refinery of CPC. The Sri Lankan side expressed its keenness for accepting such a proposal, and asked IOC to submit a concrete document.

India also raised the issue of bidding of Mannar and Cauvery basin blocks. The Sri Lankan side had earlier stated that M1 and M3 blocks would be allocated to India on nomination basis. However, they have now been put up for bidding. The Sri Lankan side advised Indian oil companies to participate in the bidding rounds since what had been announced could not be taken back. The issue of PLL supply of LNG to Sri Lanka for meeting the requirement of some of its existing power plants also came up for discussions. This would involve setting up of LNG unloading and re-gasification terminal on the Sri Lankan coast.

“Dr. Jayasundara agreed to take up the matter with Lakdhanavi Limited, a subsidiary of Ceylon Electricity Board. IOC also raised the issue of nearly 692 million Sri Lankan rupee dues by CPC to Lanka IOC on account of unpaid charges for the period from 2008 to 2011.’’

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