Lanka to take over IOC’s stake in Trincomalee tank farm

Sri Lanka today said it would partially take over the bulk of a strategic oil storage depot in Trincomalee from OIL Lanka, the local arm of Indian Oil Company.

Some reports sought to link the Lankan government's decision with India voting in favour of a US-sponsored resolution against Colombo at the United Nations Human Rights Commission over alleged war crimes in its suppression of a Tamil revolt.

However, the Lankan government denied any such connection, and OIL Lanka also confirmed that talks in this direction had been on for some months now.

In fact there had earlier been unconfirmed reports in the local media that the government was eying the 99-tank storage facility in the north-eastern port district of Trincomalee. These are now confirmed as information minister Keheliya Rambukwella announced at the weekly cabinet press briefing the plans to take back unutilised tanks from Indian state-owned IOC's local arm known as Lanka IOC.

Rambukwella said there were provisions to re-possess tanks that were not used by Lanka IOC, which bought one third of the government's retail oil business in 2003.

In line with its privatisation moves, Sri Lanka gave the World War II tank farm of 99 storage tanks to Lanka OIC, which is using 15 of them and refurbishing two more.

The minister said the new petroleum minister Anura Yapa after assuming duties in January was keen to expand the state-run Ceylon Petroleum Corporation (CPC) business and wanted to increase the CPC's storage capacity.

"If they are not using these tanks, the CPC wants to take them back and put them into good use," Rambukwella told reporters in Colombo.

Rambukwella said the decision to partially take back the tank farm had nothing to do with the UNHRC vote.
Lanka IOC head Subodh Dakwale said they were unaware of the government decision. He said they were refurbishing two more storage tanks at a cost of $17 million.

"Sri Lankan government has been negotiating with us for some time. I would say it's been a few months. We haven't heard anything from the government," Dakwale said.