Govt. mulls doubling Trinco oil tank farm project size with India
The Sri Lankan government is currently inquiring whether the joint venture proposed to be formed with the Indian government with regards to the Trincomalee oil tank farm could be doubled in size, Sri Lanka’s petroleum minister said.
“For the oil farms we have appointed E&Y to prepare a business plan. Now the TOR (terms of reference) are confirmed. Presently they’re into the job (but) we’re also looking at whether we can reserve 60 (tanks),” Petroleum Resource Development Minister Chandima Weerakkody said in response to a question Mirror Business raised yesterday.
Last month Weerakkody said that the two governments were looking at operating around 30 tanks under the joint venture.
Petroleum Resource Development
Ministry Secretary Sudharma Karunaratne told Mirror Business that the cabinet approval has been given for the possibility of eventually including all oil tanks in the farm in the joint venture.
“But it is difficult to take it all in one step, so we need to do this in stages. In the first stage, we were planning to go with 30 but now, as the minister said, it is 60,” she said.
Under an agreement in 2002, Indian state-owned Indian Oil Company (IOC) subsidiary, Lanka IOC PLC, was given one third of the ownership of the Sri Lankan stateowned company that owned the Trincomalee oil tank farm, while the tank farm was provided to Lanka IOC for a 99-year lease.
Lanka IOC PLC Managing Director Shyam Bohra said discussions on the joint venture are currently progressing between the two governments.
“That’s all I can say. We’re not involved in discussions at this level,” he said.
Lanka IOC is currently operating 15 of the 99 tanks under its control. The rest require rehabilitation in order to be operational.
Weerakkody said that the size of the investment required for this is not yet clear. The oil tank farm, which originally had 101 tanks, was completed by the British just before the start of World War II. One of the tanks was destroyed during World War II when a Japanese warplane that was carrying out an attack on the island crashed on it, while another was also destroyed due to a Royal Ceylon Air Force plane crash. Each tank could hold up to 12,100 tonnes and the tank farm has a total capacity of over one million tonnes, which makes the complex the largest oil storage facility between Singapore and the Middle East. Currently, Singapore’s Subarna Jurong is formulating a master plan for Trincomalee to become a metropolitan area in a bid to cater to the rapidly developing Bay of Bengal area as a logistics hub.
The Sri Lankan government has allocated the development of Trincomalee, which has the fifth largest all-weather, non-tidal and natural harbour in the world, to India, similar to how it has allocated Hambantota to China. Eastern Province Governor Austin Fernando recently said that if the Trincomalee oil farm becomes operational, it would bring substantial windfalls for the city. The Indian External Affairs Ministry officials who were in the island a fortnight ago said that India is interested in developing Trincomalee and the Bay of Bengal in cooperation with Japan and the US.