Sri Lankan Government goes ahead with a business plan to develop the Trincomalee oil Tank Farm jointly by Ceylon Petroleum Corporation (CPC) and Lanka LIOC official sources said.
Despite disputes on lease agreement of the Tank Farm tainted with legal issues and protests of trade unions, a new venture has been proposed between CPC and Lanka IOC under the business plan.
Energy Minister Udaya Gammanpila said the Trincomalee Oil tank farm would be managed under a company to be formed with Lanka Indian Oil Company with a majority stake for the Ceylon Petroleum Corporation (CPC).
He said there are 99 tanks used during World War II with a capacity to store 10,000 tonnes of fuel in each.
After the World War II, he said these tanks had not been utilised properly. He said the government of former Prime Minister the late Sirimavo Bandaranaike acquired these tanks from the British rule.
but the UNP government leased them out to LIOC for 35 years at an annual payment of US $ 1000 per tank.“Now, 18 years of the lease period have lapsed. LIOC uses only 15 tanks,” he said.
He further said talks are in progress with India on the timeline for the management of the tank farm, and the number of tanks to be kept under the sole purview of the CPC.
The Minister said the Cabinet paper would be submitted only after a broad consultation process with the trade unions and other stakeholders.
Cabinet has granted approval recently to allocate 24 and 14 oil tanks of Trincomalee Oil Tank Complex to Ceylon Petroleum Corporation (CPC) and Lanka IOC respectively while remaining 61 oil tanks are to be developed under Trinco Petroleum Terminal Pvt. Ltd, with shares of CPC (51%) & LIOC (49%).
After reviewing the three existing agreements with the Indian Government regarding the Trincomalee Oil Tank Complex through diplomatic talks, the two neighbouring countries have reached an agreement to implement a joint development project.
Accordingly, the Cabinet of Ministers approved the proposal presented by Minister of Power to allocate 24 oil tanks for the business activities of the Ceylon Petroleum Corporation, to allocate 14 tanks of the Lower Oil Tank Complex already in use by Lanka IOC for the company’s business activities.
It has also been agreed to implement a development project by a company named Trinco Petroleum Terminal Pvt.Ltd. of the remaining 61 tanks, 51% to be owned by Ceylon Petroleum Corporation and 49% by Lanka IOC.
However Minister Gammanpila’s statement claiming that the then government has signed an agreement to hand over all 99 oil tanks at the Trincomalee tank farm to India was completely false, official documents indicated.
Theere was no proper agreement signed to hand over 14 tanks to Lanka IOC and It was only an MOU by the two parties,a top official involved in the deal said adding that 14 tanks had been maintained by the Indian company since 2003 up to now with out alegal agreement .
More than four yeas ago, the then Cabinet of Ministers has approved a Cabinet paper presented on April 28, 2016 on “Rehabilitation and development of upper oil tank farm (UTF) by CPC to hand over the title and the ownership of 16 oil tanks of this farm to the CPC.
The Tank Farm MOU was signed between the then Treasury Secretary, CPC and LIOC on February 07 2003 and the LIOC took over the possession of 99 Tanks at Trincomalee Tank Farm for a period of 35 years.
Since past 17 years, LIOC is paying lease charges of US$ 100,000 for the tank farm in accordance with the MOU as an agrrement was not signed even at that time although it had been aghreed sign an agrremnt .
Eeven the lease deed had not been executed by the CPC and the then government due to unknown reasons.
A significant investment will have to be made to rehabilitate the upper tank farm UTF and the 2017 budget has also suggested developing the oil tank farm jointly by the CPC and LIOC, official sources disclosed
Despite disputes on lease agreement of the Tank Farm tainted with legal issues and protests of trade unions, a new venture has been proposed between CPC and Lanka IOC under the business plan devised by Ernest &Young in 2016.
Indian government has agreed to this business plan and Lanka IOC has been informed accordingly and an agreement reached to develop 30 out of 84 tanks during the first phase of the proposed venture at that time. .
Even at that the then Government has proposed to establish a new venture between Lanka IOC and the Ceylon Petroleum Corporation (CPC) to develop these tanks located within the Trincomalee Tank Farm, official documents revealed.
Cabinet of Ministers at that time has approved a Cabinet paper on April 28, 2016 on “Rehabilitation and development of upper oil tank farm (UTF) by CPC to hand over the title and the ownership of 16 oil tanks of this farm to the CPC.
But this decision was reversed on a memorandum presented by the then Prime Minister in the Cabinet meeting held in June 2016 due to objections by LIOC.
The then Cabinet has approved joint memorandum on November 26, 2016 to hand over 16 tanks to the CPC.
The aim was to immediately undertake and utilise three tanks out of 16 at the UTF to ensure a steady supply of fuel required to fully operate the thermal power plants belonging to Ceylon Electricity Board (CEB) and the private sector.
Under these circumstances the Common Workers Union (CWU) of the CPC has filed fundamental rights petition in the Supreme Court on February 09 2017 urging the judiciary to vest the oil Tank Farm in the CPC removing it from the management of the LIOC declaring the retention of the possession of Tank Farm by LIOC is illegal and unlawful.
The CWU claimed that the parties to the taking over agreement has failed to execute a lease agreement as agreed within the stipulated period the validity of the taking over agreement comes to an end therefore the said taking over agreement has no force in law at the moment.