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Sri Lanka embarks on a business plan to develop China Bay oil storage facility

Sri Lanka will soon formulate a business plan to expedite the development of China Bay oil storage facility as a major step towards making Trincomalee a regional petroleum hub with Indian assistance, a top official revealed.

Secretary to the Ministry of Power and Energy, Dr. B.M.S Batagoda told Business Times that a ten member task force is now working out the business plan aimed at harnessing full potential of the tank farm .

He noted that Indian Prime Minister Narendra Modi during his visit to the island in March this year has pledged to help Sri Lanka to turn Trincomalee into a regional petroleum hub and the Sri Lankan government has already made preliminary arrangements towards this end. A meeting of members of the task force was held at the Ministry of Power and Energy this week to discuss matters pertaining to the business plan, he disclosed.

The Lanka Indian Oil Corporation (LIOC) and the Ceylon Petroleum Corporation (CPC) have agreed to jointly develop the Upper Tank Farm at China Bay in Trincomalee on mutually acceptable terms, he said.

These oil tanks were built by the British in 1944 but had been lying idle since the end of World War two and the then government of Prime Minister Ranil Wickremesinghe has agreed to give them to India in the early 2000s. However it was not materialised.

LIOC Managing Director Subodh Dakwale told Business Times that his company already utilizes 14 tanks in the Lower Tank Farm and it will soon take over the upper tank farm with 84 giant oil tanks

Trincomalee’s China Bay facility, leased to Lanka IOC in 2002, has a potential storage capacity of about a million tonnes, each tank having a capacity of 12,100 tonnes. Mr. Dakwale said that a feasibility study on the project should be conducted to find out as to how refurbishment will be done, how much money to be spent and what opportunities are there for us to explore, he said.

Of the original 101 tanks built by the British in the 1930s, only 99 still exist and two were destroyed during the Second World War.

He said the 84 remaining tanks in the upper farm will have to be extensively rehabilitated.

The Trincomalee oil tank farm was included in the Indo-Lanka peace accord signed in July 1987 barring other countries from taking over it.
Under the pact, the work of restoring and operating the oil tank farm should be carried out as a joint venture between India and Sri Lanka.