Sri Lanka in talks to take back oil tanks leased to India

Sri Lanka today said it is mulling to take back some 99 strategic oil storage tanks leased to the Indian Oil Company's local unit Lanka IOC in the eastern port district of Trincomalee in 2002.

Accusing the main opposition United National Party (UNP) of privatising state-owned enterprises during their rule, President Mahinda Rajapaksa told parliament that his government was bent on preserving the state enterprises under state control. "Our oil storage tanks located in Trincomalee were privatised. We are currently having talks to take them back (under state control)", Rajapaksa told parliament during his 2104 budget speech in his capacity as the Minister of Finance.

Some 99 oil storage tanks were leased to the Indian Oil Company's local unit Lanka IOC in 2002 by the then government headed by Ranil Wickramnesinghe, the current leader of the main opposition UNP.

The state oil entity Ceylon Petroleum Corporation (CPC) entered an MoU with Lanka IOC to grant a long-term lease for operating the storage tanks at Trincomalee for 35 years for an annual fee of USD 100,000.

Sri Lanka in March announced that it planned to take back tanks that were not being used by the Lanka IOC. The move was seen as an immediate fall out from India voting against Sri Lanka at the UN Human Rights Council on rights accountability.

"If they are not using the tanks, we can use them," government spokesman and Minister Keheliya Rambukwella told reporters in March.

He denied any links between the Colombo's decision to ask the oil tanks back under its control and the India's vote against Sri Lanka.

Since then, the decision by Prime Minister Manmohan Singh to skip the CHOGM summit held here last month has added to the uneasiness in the relationship across the Palk Strait.