Dec 21, Colombo: The Sri Lankan government has decided to take back the petroleum storage tank complex in the East that was given to an Indian oil company on a long lease.
During the reply speech at the last budget debate on Friday in parliament Sri Lankan President Mahinda Rajapaksa said the government is considering to take back the 99 oil tanks in Trincomalee that were leased to Lanka IOC, the local subsidiary of Indian Oil Company.
The President said the main opposition United National Party (UNP) when they were in power in 2002 privatized the state-owned enterprises and this government is ready to take back and preserve the state enterprises.
"Our oil storage tanks located in Trincomalee were privatized. We are currently having talks to take them back (under state control)," the President has said in parliament.
The China Bay petroleum storage tank complex was handed over to India's state-run Indian Oil Corporation in 2002 by the UNP government which was in power between 2002 and 2004.
The tank farm in 850 acres of land has 99 tanks each with the capacity to hold 12,100 metric tons of oil.
In 2003, Lanka IOC bought one-third share in Ceylon Petroleum Storage Terminals Ltd which operates the China Bay tank farm. The Ceylon Petroleum Corp (CPC) 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 only $100,000.
Under privatization, the government gave Lanka IOC 99 storage tanks, of which 15 are being used and two more are being refurbished at a cost of US$17 million.
The Sri Lankan government now expects to convert the petroleum storage tanks to a profitable venture with foreign investment.
The China Bay tank farm that connects to the Trincomalee harbor is of historic and strategic significance and it is the largest tank farm located between the Middle East and Singapore. It was built by the British in 1930s to supply fuel to Royal Navy ships.