Sri Lanka has agreed to sign a fresh deal with India to lease out the strategic World War II era oil tank farm for 50 years in the eastern port district of Trincomalee, Energy Minister Udaya Gammanpila said here on Friday.
Mr. Gammanpila said the deal will be signed next week after the Cabinet approval and is an extension of the 2002 agreement with the local operators of the Indian Oil Company, LIOC.
Sri Lanka in 2002 entered the original deal with India on the island's most strategic oil storage complex, which was used as a supply base during World War II.
Also read: Explained | The battle for the Trincomalee oil tank farm
India at all times had shown a strategic interest in the Trincomalee tank farm which the British rulers had built to refuel Allied warships and aircraft.
“The LIOC will have the control of just 14 of the 99 tanks over a 50-year lease,” Mr. Gammanpila said while speaking to reporters here.
He said 61 tanks out of the total number of 99 tanks would be run under the joint venture company formed between the state oil entity, Ceylon Petroleum Corporation (CPC) and the LIOC with CPC holding the majority 51 per cent stake.
Mr. Gammanpila, who had previously said his intention was to reacquire complete control of the tanks, claimed the new deal was “a triumph for Sri Lanka”.
The next week’s formalisation of the agreement will come in the background of Sri Lanka seeking India’s help to tide over its current economic woes exacerbated by the ongoing foreign exchange crisis in the local economy.
Officials said that the island nation has shut its only refinery for its inability to pay for crude oil and was negotiating a credit line with India for fuel purchases.
