The Government has decided to develop 16 of the 85 remaining oil storage tanks in Trincomalee by a joint venture between the Ceylon Petroleum Corporation (CPC) and Lanka IOC PLC (LIOC), Petroleum Resources Development Minister Arjuna Ranatunga told Parliament yesterday.

LIOC will be allowed to continue using the 15 tanks in Trincomalee, whichwere handed over in the previous decade. The remaining 69 storage tanks will be made available for future development in public private partnership basis.

Delivering a Ministerial notice yesterday in Parliament, Ranatunga urged the Opposition to stop speculating a privatisation plan, which is not in the Government mandate.

“The Cabinet met on 7 August has reached a decision to allow LIOC to continue enjoying the use of storage tanks in the lower tank farm, subjected to a timeframe to be agreed upon. A joint development program between LIOC and CPC will make use of the 85 tanks on the upper section of the tank farm.”

According to the Minister, a subsidiary will be established with the contribution of LIOC and CPC to continue development programs, enabling the Government to cater to the growing need of fuel and anticipated petroleum development projects.

“A set of 16 storage tanks found in the upper part of the tank farm will be assigned to this proposed subsidiary for development, and later, these storage tanks will be released to CPC for exclusive use. Some remaining 69 storage tanks will be made available for the future development of petroleum resources. A new agreement will be entered into between the entities. The lands where both upper and lower tank farms are located will be held by the Government of Sri Lanka. In 2002, the initial agreement was inked, but no lease agreement was put in place. However, the storage tanks are in good shape but needs restoration,” he added.

In 2003, Lanka IOC — a subsidiary of Indian State-owned IOC — 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 a MoU with Lanka IOC to grant a long-term lease to the Indian firm for operating the 99 storage tanks at Trincomalee for 35 years for an annual fee of $100,000.

However, the 35-year lease finalisation dragged on for years, and the trade unions and different factions of society questioned the Government plans for the 99 storage tanks, each with a capacity of 12,100 tons.

They are located on 850 acres of land in close vicinity to the Trincomalee Harbour, built in 1944 under the British rule. Out of the 101 storage tanks built, there are only 99 remaining at the moment.

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