Rajapaksa retaliates to India’s moves

 Friday, 01 November 2013 

The Mahinda Rajapaksa government is now retaliating to India’s failure to announce the participation of Indian Prime Minister Manmohan Singh in the Commonwealth Heads of Government Meeting (CHOGM) in Colombo this month.

The Indian media has reported that the Indian Oil Corporation's (IOC) Lankan arm, Lanka IOC, which leased oil storage tanks at Trincomalee, has hit a dead end as it attempts to set up a joint venture with Ceylon Petroleum Corporation for about 84 tanks.

The Times of India has reported that coming months after the Rajapaksa government decided to “repossess” a number of unused tanks; the move is being seen by some as retaliation for India's recent moves.

Petroleum secretary Vivek Rae has asked foreign secretary Sujatha Singh to take up the issue at the diplomatic level since the Lankans were refusing to engage the petroleum ministry.

He has said Lanka IOC had given a proposal for a joint venture to the Lankans in May but there was no response yet.

Colombo had also rebuffed oil minister Veerappa Moily who had discussed the issue with his Lankan counterpart at a recent Asian energy roundtable in Seoul.

India voted against Sri Lanka in a US-sponsored resolution at the Human Rights Council in March, which was seen as a sign of betrayal by Colombo. Right after that decision, the Lankan government announced it would renegotiate the tank farm agreement signed in 2003.

Now, India is threatening to put a damper on the first multilateral CHOGM in Sri Lanka by downgrading its presence from the prime minister level. Sri Lanka has already threatened it would associate more closely with China and Pakistan if Prime Minister Manmohan Singh did not travel to Colombo for the summit.

Lanka IOC was given 99 storage tanks and ancillary facilities , divided into ‘upper’ and ‘lower’ farms, that date back to World War II days.

IOC utilizes the 15 tanks for petroleum products but the upper tank farm needs substantial investment since they are more rundown.

According to the Times of India, a lease agreement for 35 years for the land and facilities was to be signed but it never was. The lease agreement was a successor to the original agreement whereby India pays $100,000 annually.