Trinco oil tanks: Transparency is key

Energy Minister Udaya Gammanpila announced last week that a deal to jointly develop the Trincomalee oil tank farm was in its final stages after 16 months of negotiations. The news had been reported in Indian media as a strategic victory for that country over its Asian rival China. Other than the geopolitical dimensions of the ‘great game’, there is little information available in the public domain regarding the terms and conditions of this impending agreement.

At the very outset, it must be made clear that there is nothing wrong with a strategic investment such as developing the oil tank farm which quite literally has been rusting since 1960 when it was nationalised (after paying a hefty fee in pound sterling) by the then Sirimavo Bandaranayake Government. This strategic asset which could have generated revenue and contributed immensely to the national economy for the last 60 years was wasted and allowed to decay.

The tank farm at China Bay in Trincomalee was built in the 1930s by the Colonial power and originally consisted of 101 tanks with a capacity of 12,000 kilolitres each. Two of these tanks were destroyed by a Japanese air raid in 1941. 

Only 15 tanks in the lower tank farm are currently in use by the Lanka IOC, a subsidiary of the Indian Oil Corporation Ltd. (IOC) after these were developed after an agreement was reached in 2003. According to Indian media, the new agreement due to be finalised is for the development of the remaining tanks in the upper tank farm.  

The news of the deal comes amid further reports that India is finalising an assistance package that will include a credit line for food and medicines, and a second credit line to cover oil imports from India. It is assumed that the finalisation of the oil tank farm deal will be very much part of this desperately needed assistance. 

Sri Lanka, due to its poor financial management, has backed itself into a corner in these negotiations. Due to the dire financial situation, Government leaders will have little wiggle room to negotiate on the finer details of the agreement which will be effective for decades to come.

Precisely for this reason, the Government must ensure transparency in the agreement. As seen with the recent agreement for the Yugadanavi power plant, any attempt to rush through a cabinet paper and obtain approval of the cabinet through heavy-handed tactics will only create further chaos and seriously erode the country’s credibility as a safe destination for investments. 

There is bound to be opposition to such an agreement from many quarters. Even though this strategic asset has been wasted the last 60 years there has been vehement opposition every time there had been any attempt of utilising the oil tanks. These have mostly been from trade unions due to their entrenched opposition to any form of privatisation or restructuring of State-owned enterprises, including those making colossal losses. 

Secondly from the ultra-nationalists that have generally been opposed to economic cooperation with India in particular. It is due to these factors that previous joint ventures such as the development of the East Container Terminal at the Colombo Port and free trade agreements like the Comprehensive Economic Partnership Agreement (CEPA), which would have brought enormous benefits to the country were scuttled.

This Government in particular cannot ignore the serious concerns of corruption and lack of transparency. Due to its own dubious record and the serious lack of financial integrity of key players within the administration, the general public is right to be sceptical of any secret deals that are negotiated behind closed doors. 

If the Government wishes for this agreement to go through, it must address these concerns. The best way to do so is to make the agreement public, once finalised, presenting the terms and conditions of the same and allowing for a parliamentary debate for all political parties and shades of opinions to be heard on this matter of national interest.