SL Govt explores a way out of 35 year Trinco oil farm pact with LIOC
By: Staff Writer
Colombo (LNW): Trincomalee Tank Farm Agreement signed in 2003 valid for 35 years which allowed India to block petroleum development in Trincomalee, Energy Minister Kanchana Wijesekera disclosed.
The Tank Farm Agreement was signed between the then Treasury Secretary, Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Company (LIOC) on February 07 2003.
He was responding to a question from opposition legislator Kabir Hashim raised in parliament about the agreement to lease Trinco oil tanks signed with India in 2022.
Hashim, a former energy minister, said he had information that some parties were willing to lease the tanks which were assigned to the CPC.
“But I understand that even to lease those tanks, even if they belong to the CPC, it cannot be done unless the Indian Oil Corporation permits it,” Hashim claimed.
“Udya Gammanpila signed that agreement. Has such an agreement been signed? If that is so it is dangerous, he said.
“What you said is correct,” Minister Wijesekera admitted. “It says if some business is conducted, especially in the Trincomalee district, the approval of the CPC or the LIOC and CPC joint venture and the LIOC has to be obtained.“We are trying to correct this for several months.”
Sri Lankan Government has devised a business plan to develop the Trincomalee oil Tank Farm jointly by Ceylon Petroleum Corporation (CPC) and Lanka LIOC in 2021 official sources said.
Despite disputes on lease agreement of the Tank Farm tainted with legal issues and protests of trade unions, a new venture has been proposed between CPC and Lanka IOC under the business plan in 2021.
Since past 19 years, LIOC is paying lease charges of US$ 100,000 for the tank farm in accordance with the agreement even though the lease deed had not been executed by the CPC and the government due to unknown reasons.
At that time the then Energy Minister Udaya Gammanpila said the Trincomalee Oil tank farm would be managed under a company to be formed with Lanka Indian Oil Company with a majority stake for the Ceylon Petroleum Corporation (CPC).
He said there are 99 tanks used during World War II with a capacity to store 10,000 tonnes of fuel in each.
After the World War II, he said these tanks had not been utilised properly. He said the government of former Prime Minister the late Sirimavo Bandaranaike acquired these tanks from British rule.
But the UNP government leased them out to LIOC for 35 years at an annual payment of US $ 1000 per tank. Now, almost 20 years of the lease period have lapsed. LIOC uses only 15 tanks,” official sources said.