The Hindu : Colombo nod for leasing oil farm to IOC

Online edition of India's National Newspaper
Sunday, May 26, 2002

International

International

Colombo nod for leasing oil farm to IOC

By Nirupama Subramanian

COLOMBO MAY 25. The Sri Lankan Cabinet has approved a proposal to give a strategically located oil storage facility in the eastern port city of Trincomalee on a long lease to Indian Oil Corporation (IOC), but the move might be opposed by the LTTE.

A pro-LTTE website has described the proposed takeover of the oil farm by IOC as an "interference'' by the Sri Lankan Government in the land rights of the Tamil people. The Cabinet spokesman, G.L. Peiris, announced yesterday, that the approval for the proposal was given at the Cabinet meeting on Thursday keeping in mind that it would have "a positive impact on (Sri Lanka's) national security and energy security interests''.

Mr. Peiris said Sri Lanka recognised that India had a strategic interest in the Trincomalee oil farm. ``Taking advantage of this, the Government has decided to give it on a long-term lease to Indian Oil Corporation,'' he said.

A team from the IOC was here recently to study the feasibility of operating the farm and was expected to submit its report this week. The World War II oil farm, which has 99 storage tanks, is in a state of disuse and would need major rehabilitation works before it can become operational again. It is not clear yet if the IOC plans to take over the running of the entire oil farm or will lease only a few tanks.

However, Mr. Peiris indicated that the Government was interested in handing over the entire farm to the IOC. He said if the IOC was not interested in operating all the tanks on the farm, it was free to lease out whatever it did not need to other companies. The proposal to invite the IOC to run the farm follows Government moves to dismantle State control over the petroleum sector in Sri Lanka.

The Minister said the IOC would be expected to form a new company here with a reputed local partner, but would hold the majority shares in this company.

Though Mr. Peiris declined to elaborate on how leasing the oil farm to Indian Oil would serve Sri Lanka's security interests, the view here is that it would present the LTTE with a fait accompli on the status of Trincomalee. The port city which is 260 km from the capital, is central to the Tamil homeland concept without which, the LTTE has said, there can be no political settlement to the conflict. But, Indian involvement in the oil farm, located close to the harbour, would introduce an entirely new dimension to the status of Trincomalee. Already, the move has elicited rumblings of protest from the LTTE camp. The pro-LTTE website Eelamnation.com slammed the proposed deal, saying only the people of "Tamileelam'' had the right to take a decision on the leasing of the oil farm.

"The Sri Lankan Government has no such right,'' the website stated.

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