Hardening its stance after India backed a UN resolution against Sri Lanka, Colombo has indicated that a decade-old MoU on a strategic oil tank farm in the island nation would have to be re-negotiated to include a Lankan partner in its operation, the Indian Express reported today.
In 2003, Indian Oil Corp subsidiary, Lanka IOC (LIOC), bought one-third share in Ceylon Petroleum Storage Terminals Ltd which operates the China Bay tank farm. Ceylon Petroleum Corp (CPC) and Colombo entered into an MoU with LIOC to grant a long-term lease for sole operation by the latter.
However, the 35-year lease finalisation dragged on as Colombo insisted that CPC had no authority to sign the lease for the tank farm which was a state asset.
Last month, Sri Lanka â€” through its Finance, Planning and Economic Development Secretary P B Jayasundra â€” conveyed to New Delhi that the lease could be finalised only if LIOC took on a Lankan company as a partner.
The best way to move ahead, he told the Indian petroleum ministry, was to set up a joint venture between LIOC and a government entity like CPC on the lines of a joint venture formed between National Thermal Power Corp and Ceylon Electricity Board for a 500 MW coal plant at Sampur.
An IOC official said IOC was told to submit a proposal by May on the structure of the proposed joint venture to address all issues â€” tank farm as well as bunkering of foreign ships at northeastern Trincomalee port through improvement of its jetty and draft.
â€œBoth countries agreed to finalise the joint venture arrangement on fast track, preferably within three-four months,â€ said the official.
He said Colomboâ€™s stand could have been harsher if not for the legal view by its attorney general Palitha Fernando, who opined that the issue needed to be sorted out between both parties because of a sovereign agreement between two nations.