RoydadNaft –Sri Lanka is trying to find a way out of a clause which allowed India to block petroleum development in Trincomalee, according to an agreement signed on a tank farm, Energy Minister Kanchana Wijesekera said.

He was responding to a question from opposition legislator Kabir Hashim about the agreement to lease Trinco oil tanks signed with India in 2022.

Hashim, a former energy minister said, he had information that some parties were willing to lease the tanks which were assigned to the CPC.

“But I understand that even to lease those tanks, even if they belong to the CPC, it cannot be done unless the Indian Oil Corporation permits it,” Hashim asked.

“Udya Gammanpila signed that agreement. Has such an agreement been signed? If that is so it is dangerous.

“This is an asset of our country. For us to give an asset belonging to us, do we have to ask India?”

“What you said is correct,” Minister Wijesekera admitted. “It says if some business is conducted, especially in the Trincomalee district, the approval of the CPC or the LIOC and CPC joint venture and the LIOC has to be obtained.

“We are trying to correct this for several months.”

The agreement was signed when Sri Lanka was in severe forex shortages after the aggressive deployment of macro-economic policy involving large scale money printing to cut rates backed up by tax reductions to target ‘potential output’.

The rate cuts drove the country into forex, fuel and medicine shortage forcing the country to rely on foreign borrowings, with some critics saying it led to a loss of ‘sovereignty’ to lenders including the International Monetary Fund.

India gave Sri Lanka billions of dollars in loans even though the country had defaulted when multilateral agencies and Japan were also not allowed to give new loans under their rules.

India has been sensitive to foreign investors in Sri Lanka’s north for many years partly out of security concerns.

The tanks were built by the British during World War II but were unused for many decades until then Prime Minister Ranil Wickremesinghe assigned some tanks when Lanka IOC entered Sri Lanka’s fuel distribution.