PROJECTS

A strategic alliance

T.S. SUBRAMANIAN

IN a "strategic alliance", with geopolitical significance, Indian Oil Corporation (IOC) and Ceylon Petroleum Corporation (CPC) are to come together to provide oil security to India and Sri Lanka. IOC will take over Trincomalee tankages of the CPC on a long-term lease. There are 99 oil tanks, each with a capacity of 12,250 kilolitres, situated in China Bay near the Trincomalee harbour in eastern Sri Lanka. Located on a low hill covered by scrub jungle, most of them are in disuse. A pipeline connects them to Trincomalee harbour about 2 km away.

IOC will refurbish the tanks, which were built by the British in the 1930s and use them to store petroleum products brought by tankers from India for sale in Sri Lanka. This will provide an energy safety net to India and Sri Lanka during times of petroleum crisis.

The United States was interested in these tanks for long. Right now, it wants berthing and refuelling facilities for its vessels at Trincomalee harbour if it chooses to attack Iraq.

What is politically important is that with IOC gaining control of the Trincomalee oil tanks India will get an entry into the Tamil-dominated north-eastern province of Sri Lanka.

To gain control of the tanks, India has used two clauses in the Indo-Sri Lankan Agreement signed by Prime Minister Rajiv Gandhi and Sri Lanka President J.R. Jayewardene on July 29, 1987. In the exchange of letters between them as part of the Agreement, addressing "some of India's concerns", clause 2 (ii) states, "Trincomalee or any other ports in Sri Lanka will not be made available for military use by any country in a manner prejudicial to India's interests." The next clause stipulates that "the work of restoring and operating the Trincomalee oil tank farm will be undertaken as a joint venture between India and Sri Lanka."

According to V. Suryanarayan, former Director, Centre for South Asian and South-East Asian Studies, University of Madras, the LTTE may not like India coming into Trincomalee. "If it has not criticised India on this, it is because (the LTTE is worried) that the peace process may be derailed," he said. A memorandum of understanding (MOU) was signed by IOC and CPC in New Delhi on June 11, 2002, during the visit of Sri Lanka Prime Minister Ranil Wickremasinghe to India. Under the MOU, IOC will take over 100 retail petroleum outlets of CPC to sell petroleum products. An External Affairs Ministry press release said: "The CPC will assist Indian Oil to reassign the franchise outlets." It added that IOC and the CPC would carve out modalities for facilitating supply of petroleum products to Sri Lanka through IOC.

Another interesting revelation from the India-Sri Lanka joint statement issued during Wickremasinghe's visit from June 8 to 12 was that "... a preliminary study regarding the proposed land bridge between the two countries has been completed."

There are also plans to lay a submarine oil pipeline between India and Sri Lanka. Another report quoted highly placed IOC sources as saying that "a team of officials is studying various options of laying a long pipeline from Tamil Nadu to northern Sri Lanka."

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