Colombo: Sri Lanka on Thursday signed an agreement with a local Indian oil corp unit, Lanka IOC, to rent 75 oil tanks, because the island moved closer to securing $ 500 million fuel credit lines from India.
The signing of the agreement came ahead of the visit of the Chinese Foreign Minister to Colombo this weekend, with China also competing for influence in Sri Lanka.
Sri Lanka faced his worst financial crisis in decades with reduced foreign exchange reserves and payment of $ 4.5 billion worth of debt due in 2022, encouraged him to see innovative ways to bring foreign exchange.
Previously, Sri Lanka had agreed to hire all 99 tank oil farms to India in 2003.
According to the new Pact, Lanka IOC will have 14 tanks on a 50-year lease while the joint venture with Ceylon Petroleum Corporation (CPC)), Terminal Petroleum Trinco, will develop 61 oil farms.
Mr.
will use 24 remaining tanks.
“This agreement will link the rental agreement entered by the two countries in 2003 and bring tank agriculture under a new governance structure,” said the Sri Lankan Energy Ministry in a statement on Thursday.
Before the agreement on Thursday, Lanka IOC operated 15 of the 99 storage tanks at the East Port Trincomalee.
The Sri Lankan government has considered developing the rest to increase the fuel storage capacity.
Prime Minister Narendra Modi during Visti to Sri Lanka in 2019 said the project could help the island became the center of regional oil.
The Indian government and Sri Lanka have tried since 1987 to divide the ownership and development of the agricultural of the World War II era tank in Trincomalee, a strategically important port from the east coast of the beautiful island.
Sri Lanka is located on the delivery route between exporters of Gulf oil and Asian consumers, and Trincomalee functions as an important allied supply center during World War Dua.