Giving major heartburn to China, New Delhi and Colombo on Wednesday (January 5) announced their decision to jointly develop an oil tank farm in the island’s north-eastern Trincomalee province. According to the agreement reached, the Indian Oil Subsidiary, Lanka IOC (LIOC) would be given a 49% stake in the joint development of the Trincomalee Oil Tank farm, with Ceylon Petroleum Corporation keeping 51%.
Located in China Bay, the tank was built during the Second World War by the British to serve as a refuelling station. The Oil farm has 99 storage tanks with a capacity of 12,000 kilolitres. Currently, LIOC runs 15 tanks but the deal will see 61 tanks being jointly developed.
The nearly century-old oil tanks need an urgent overhaul, which may cost millions of dollars. However, to keep Beijing at bay, New Delhi considers it a prudent investment.
In 1987, India and Sri Lanka agreed to jointly restore and operate the Trincomalee oil tank farm through an exchange of letters annexed with the India-Sri Lanka agreement signed between the two countries. However, owing to the civil war and several other bottlenecks, the deal could never reach its fruition.
PM Modi had given a renewed push to the deal
After PM Modi visited Sri Lanka in 2015, the two sides agreed to set up a petroleum hub in Trincomalee, for which a “joint task force” would draw up plans. However, with China lovers sitting in the Sri Lankan cabinet, the deal went into a lull once again.
But with Sri Lanka spiralling into an economic crisis, courtesy of a belligerent China, New Delhi has sprung into action and started to make its moves to bail the country out and simultaneously keep China at bay.
Reportedly, Foreign Secretary Harsh Vardhan Shringla in October during his visit to the island nation made it a point to tour the tank farms, foreshadowing the just-concluded deal.
The economic crisis has deepened in Sri Lanka of late. The country owes more than $6 billion to China and is expecting India to lend it a helping hand. While the chatter from New Delhi has been low, some news reports suggest that the Modi government is mulling a couple of way-outs for the island nation.
India bailing Sri Lanka out
Reportedly, New Delhi is looking to provide two credit lines to Sri Lanka – one of $1 billion to help the island nation import food, medicine and other essential items and another of $500 million for the import of petroleum products from India.
Being the net security provider in the Indian Ocean region, India has always provided steadfast economic and military support to Ceylon. India has, so far, provided Sri Lanka with 12.64 million covid vaccines, making India a front-runner in staving off Sri Lanka’s health crisis.
India is also facilitating Indian investments in different sectors in Sri Lanka to contribute to the growth and expand employment. Although, thanks to India’s aggressive diplomacy, Sri Lanka has tried to address Indian concerns over the past few months.
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The Adani group in October had signed a $700-million agreement with the Sri Lanka Ports Authority (SLPA) and conglomerate John Keells Holdings, to develop and manage the Colombo West International Container Terminal.
The deal may come as a rude shocker to China which had been eyeing the 850-acre farm to go with its usurped Hambantota port. However, New Delhi’s fresh interest in the deal and its eventual completion has given the Modi administration, a much-needed advantage.