He said the Petroleum Industries Ministry has sought the Attorney General’s advice on the best course of action.
“The Ceylon Petroleum Corporation (CPC) permitted the LIOC to use some of the storage tanks at the China Bay Oil Tank Farm when the LIOC entered Sri Lanka’s fuel distribution market during the Ranil Wickremesinghe Government. But both parties had failed to sign a proper agreement or had sought the Attorney General’s advice on the legal aspects of the offer,” the source said.
The main issue here is that the CPC has no authority to give the permission to the LIOC because the CPC does not own the tank farm, which is a state asset.
“We are under heavy pressure from the Indians to sign the agreement as early as possible but considering the value of this state asset and the sensitivity of its strategic location we must be extra vigilant before taking a decision. Besides the LIOC pays only a nominal fee for the use of about seven tanks,” the source said. If the Tank Farm is to be transferred to the LIOC it must be done by the Land Commissioner because the land where the Tank Farm is located belongs to the government. When the Indian Company was permitted to use the Tank Farm for fuel storage in 2003, there was no title clearance and therefore it is not legally valid,” he said.
The source said a cabinet paper will be submitted shortly for their re-acquisition based on the Attorney General’s advice because the Indian company had been given the use of the tanks was a violation of several government regulations.
The tank farm consisting of 99 tanks is located on an 850-acre block of land. Each of the tanks has a holding capacity of 12,100 metric tonnes of oil. The Petroleum Ministry sources said the government expected to convert the petroleum storage tanks into a profitable venture with foreign investment.
The China Bay tank farm that connects to the Trincomalee Harbour is of historic and strategic value and it is one of the largest tank farms between the Middle East and Singapore. It was built by the British in the 1930s to supply fuel to the Royal Navy vessels. During the nationalisation programme in 1957, the then Prime Minister S.W.R.D. Bandaranaike acquired the Tank Farm on a payment of 250,000 pounds sterling to the British government.
Meanwhile, the Attorney General Palitha Fernando said he had advised the two parties to come to an understanding on this matter and sort it out by themselves. (SAJ)