Will India get the Trinco fuel monopoly?
BY Shenal Fernando
Duminda Nagamuwa, a frontline Socialist Party politician, claimed yesterday (24) that India is seeking to include as a term in the $ 500 million fuel line of credit sought by the government of Sri Lanka ( GoSL), the right for India to have complete monopoly over the unloading and sale of fuel in the Trincomalee region.
Nagamuwa said, âIn addition to the many agreements made previously and the diplomatic pressure currently being exerted to seize the 99 oil reservoirs belonging to Sri Lanka, India is also seeking to introduce a clause in the new loan which will remove Ceylon’s duty. Petroleum Corporation (CPC) the monopoly on activities such as the sale of fuel, unloading of fuel and the sale of bunker fuel in the Trincomalee region and grants Lanka IOC (LIOC) full control over these activities.
He further claimed that this was a “very dangerous development” for Sri Lanka and that a similar agreement had been reached under the previous government with China.
âUnder the Port of Hambantota Sale Agreement signed by the previous government, CPC has neither the authority nor the authority to sell fuel within 100 km of the Port of Hambantota. And this year, Chinese companies started supplying bunker fuel from the Port of Hambantota and they described it as a very profitable business, âNagamuwa said.
However, when Morning business contacted LIOC Director General Manoj Gupta yesterday to confirm the veracity of the allegations made by Nagamuwa, he categorically denied the allegations.
âIt is absolutely baseless and we deny it completely. There is absolutely no element of truth in it,â Gupta said.
Likewise, Energy Minister Udaya Gammanapila, speaking to us, also denied the above allegations and called them “an absolute lie”.
In recent months, GoSL has sought lines of credit from India and Oman to finance its fuel import purchases due to the dangerous position of the country’s foreign exchange reserves. According to data from the Central Bank, Sri Lanka’s foreign exchange reserves fell to $ 1.6 billion at the end of October, from $ 2.1 billion at the end of September.
In September, the GoSL requested a $ 500 million line of credit from India to maintain the island’s fuel supply, fearing a fuel shortage by the end of the year.
It was revealed to us last month by a senior Treasury official on condition of anonymity, that the Export-Import Bank (EXIM) of India has handed over the relevant documents relating to the line of credit requested by Sri Lanka to the respective Indian parties for negotiation with the GoSL. However, Sri Lanka has not yet received such documents from the Indian parties.
Oman’s $ 3.6 billion line of credit that is expected to finance the purchase of fuel for a period of 12 months was approved by Cabinet earlier this month.
However, it was reported that a proposal by the Omani government to grant them an offshore block in the Mannar Basin to explore for oil fields, in lieu of credit interest payments, was rejected by the GoSL.