Contract for Trincomalee Port by India not to be inked during Modi visit

With China gaining a toehold in the south of the Island nation, India has been keen to counter-balance it by strengthening its position in Trincomalee.

Published: 27th April 2017 10:38 PM  |   Last Updated: 27th April 2017 10:38 PM   |  A+A-

Sri Lanka is in a precarius position due to mounting Chinese debt and the leasing out of stakes in Hambantota Port (in picture) to Chinese firms.

By Express News Service

NEW DELHI: The much awaited agreement to develop Trincomalee Port, in the Eastern Province of Sri Lanka, by India will not be inked during Prime Minister Narendra Modi’s visit next month, but the two countries have agreed to set up a Joint Working Group to work details of it.

With China gaining a toehold in the south of the Island nation, India has been keen to counter-balance it by strengthening its position in Trincomalee, a surfer’s paradise in the post-conflict Sri Lanka and is touted as a natural harbour and thus with greater benefits. But that will take some time.

“A port, petroleum refinery and other industries in Trincomalee, for which a J​oint ​W​orking  Group will be set up​ to further discuss ​and flesh out details,” Ministry of External Affairs (MEA) Spokesperson Gopal Baglay said.

India’s cautious approach in pushing for economic cooperation with Sri Lanka, has been reflected in exploring joint ventures in different sectors to allay fears of Indian hegemony in the country.  This was reflected in the MoU that was inked during the visit of Sri Lankan Prime Minister Ranil Wickremesinghe. Elaborating on it, Baglay on Thursday averred that India was implementing the internally focussed strategy of “Sabka Sath, Sabka Vikas” externally too in the neighbourhood to promote connectivity.

Sri Lanka is in a precarius position due to mounting Chinese debt and the leasing out of stakes in Hambantota Port to Chinese firms. This makes it difficult to increase pace of economic cooperation with India, which has also become a political issue in the island nation. Hence, India while pushing for greater cooperation is looking for Joint Ventures to allay fears of Indian takeover of the country’s market.

The main areas and the scope of cooperation are a regasified Liquefied Natural Gas (LNG) fired 500 MW capacity LNG Power Plant; an LNG Terminal /Floating Storage Regasification Unit (FSRU) in Colombo/Kerawalapitiya and a 50 MW Solar Power Plant in Sampur. The two countries have also agreeed to cooperate in jointly developing the Upper Tank Farm, the British-era oil storage facility in Trincomalee, the strategically located port town in the Eastern province.

“Upper Tank Farm in Trincomalee will be jointly developed by India and Sri Lanka​.  A​s​ you would be aware, Lanka IOC (Indian Oil Cooperation) has had the rights to develop ​the Tank Farm ​since 2003.  At present, only Lower Tank Farm is developed.  However, Lanka IOC had rights to fully develop the project. 

“Given our spirit of partnership, we proposed to Sri Lanka to develop Upper Tank Farm as joint venture.  This needs fresh investment.  Sri Lanka also had special requirements.  There will be discussions between the two sides on various aspects and details,” Baglay said. As per laid down conditions of the 2003 agreement, India was to upgrade and operationalise the tanks dating back to World War –I during its 35-year lease. The project has been delayed as the two sides could not concur on operational details of it.

India is also exploring Industrial Zones or Special Economic Zones in identified locations in Sri Lanka,  new projects for track upgradation and purchase of rolling stock for Sri Lankan Railway; a Container Terminal in Colombo Port as a Joint Venture; and development in Agricultural sector and livestock.

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