The soon-to-be-concluded agreement between India and Sri Lanka for a joint development of the Trincomalee oil tank farms is a highlight in the evolving relations between the two nations. As this positive indication surfaces, it’s important to delve into the details of the deal, how it would impact both countries and the key issues affecting their bilateral relations.
The Trincomalee Oil Tank Farms Deal
Constructed by the British during World War II as a refuelling station, the Trincomalee oil tank farms are based near the globally sought-after deep water natural harbour of Trincomalee in ‘China Bay’. The proposal for joint development was presented 35 years ago, under the framework of the Indo-Lanka Accord 1987. It consists of 99 storage tanks, with each boasting a capacity of 12,000 kilolitres. From 2003, the Indian Oil Corporation’s subsidiary, Lanka IOC, commenced operations on these farms. Currently, they are tasked with managing 15 tanks, with negotiations for the rest underway.
Strategic Significance of the Deal
The location of these oil tank farms offers an edge – they are situated along some of the busiest shipping lanes worldwide and are equipped with a deep-water harbour. Thus, a fully functional oil storage facility and refinery adjacent to the Trinomalee Port would be economically beneficial for India and Sri Lanka.
The Indo-Lanka Accord 1987
Primarily aimed at balancing India’s strategic interests, interests of people of Indian origin in Sri Lanka, and rights of Tamil minority in Sri Lanka, the Indo-Lanka Accord was signed in the backdrop of the Civil War in Sri Lanka. It authorized the placement of the Indian Peace Keeping Force (IPKF) in Sri Lanka and brought about the thirteenth Amendment to the Constitution of Sri Lanka and the Provincial Councils Act of 1987.
Issues in India-Sri Lanka Relations
India-Sri Lanka relations have been under strain due to increased Chinese influence in Sri Lanka. China, as the largest investor in Sri Lanka, holds a significant economic footprint and political clout there, contributing to 23.6% of the total Foreign Direct Investment (FDI) during 2010-2019, in contrast to India’s 10.4%. The Katchatheevu Island issue, non-implementation of provisions of the 13th Amendment of the Sri Lankan Constitution, and Sri Lanka’s withdrawal from the East Container Terminal Project at Colombo Port compound these issues.
India-Sri Lanka Cooperation: Recent Developments
Despite the prevailing challenges, India and Sri Lanka have agreed to a four-pillar initiative focusing on food and energy security. This comprises Lines of Credit, currency swap agreement, modernisation projects, and Indian investments. Joint military and naval exercises were conducted, and Sri Lanka’s participation in regional groupings where India plays a critical role demonstrates cooperative steps. Sri Lanka’s support for India’s ‘Neighbourhood First’ policy and SAGAR (Security and Growth for all in the Region) also strengthens this relationship.
The future of the bilateral relations between India and Sri Lanka will hinge significantly on nurturing the ‘Neighbourhood First’ policy, embracing ‘Island Diplomacy’, navigating emerging realities, and promoting private sector investments for economic resilience.
Last Modified: February 14, 2024