What is the news?
Recently it was announced, that Indian Oil Subsidiary Lanka IOC would be given 49% stake in the joint development of the Trincomalee Oil Tank farm with Ceylon Petroleum Corporation keeping 51%.
This arrangement is for the next 50 years.
The next step is three formal agreements: two between CPC and LIOC — one for the joint development and the other for the 24 tanks to CPC — and the third between the Sri Lankan government and LIOC.
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The idea of the agreement is 35 years old but has come into shape now.
India focussed its attention over the matter after China got control over the Hambantota port in 2010.
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Why Trincomalee matters?
It is a pre-WWII era oil storage facility has a capacity of nearly 1 million tonnes, which far outstrips the demand in Sri Lanka.
It is the nearest port to Chennai.
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Source: This post is based on the article “Developing Trincomalee oil tank farm: What the deal means for India, Lanka” published in The Indian express on 3rd Jan 2022.