Colombo: Sri Lanka has agreed to sign a fresh deal with India to lease out 14 out of the 99 tanks at the strategic World War II-era oil tank farm for 50 years in the eastern port district of Trincomalee, Energy Minister Udaya Gammanpila said here on Friday.

Gammanpila said the deal will be signed next week after getting approval from the Cabinet. The new agreement will be an extension of the 2002 agreement with the local operators of the Indian Oil Company, LIOC.

Sri Lanka in 2002 entered the original deal with India on the island’s most strategic oil storage complex, which was used as a supply base during World War II.

India at all times had shown a strategic interest in the Trincomalee tank farm which the British rulers had built to refuel Allied warships and aircraft.

The LIOC will have the control of just 14 of the 99 tanks over a 50-year lease, Gammanpila said while speaking to reporters here.

He said 61 tanks out of the total number of 99 tanks would be run under the newly-established joint venture company Trinco Petroleum Terminals Ltd. formed between the state oil entity, Ceylon Petroleum Corporation (CPC) and the LIOC with CPC holding the majority 51 per cent stake.

Gammanpila, who had previously said his intention was to reacquire complete control of the tanks, claimed the new deal was a triumph for Sri Lanka .

In October, President Gotabaya Rajapaksa told visiting Foreign Secretary Harsh Vardhan Shringla that Indian investors are invited to invest in the island nation and Sri Lanka was keen to resolve the situation regarding the Trincomalee oil tanks in a manner that is beneficial to both countries.

The World War II-era oil storage facility in the strategically advantaged port district of Trincomalee has been a key bilateral economic partnership link for decades.

Since 2003, the Lanka IOC, the Sri Lankan subsidiary of India’s oil major Indian Oil Corporation (IOC), has the leasing rights to 99 tanks at the facility for a period of 35 years for an annual payment of USD 100,000.

Shringla had also visited the oil storage site during his trip to Sri Lanka. The visit was considered significant as oil sector trade unions in the country have demanded that the tanks be brought under the control of the state fuel entity Ceylon Petroleum Corporation (CPC).

The formalisation of the agreement next week will come in the background of Sri Lanka seeking India’s help to tide over its current economic woes exacerbated by the ongoing foreign exchange crisis in the local economy.

Officials said that the island nation has shut its only refinery for its inability to pay for crude oil and was negotiating a credit line with India for fuel purchases.

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