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India to be granted fuel monopoly in Trinco?

25 Nov 2021

  • Duminda Nagamuwa claims India to solely control oil unloading, sale of fuel in Trinco
  • Alleges monopoly is a term of the upcoming $ 500 m credit line to Sri Lanka
  • Gammanpila, LIOC denies allegations
BY Shenal Fernando Frontline Socialist Party politburo member Duminda Nagamuwa alleged yesterday (24) that India is seeking to include as a term in the $ 500 million credit line for fuel sought by the Government of Sri Lanka (GoSL), the right for India to have the complete monopoly over the unloading and sale of fuel in the Trincomalee region.  Nagamuwa claimed: “In addition to the numerous agreements previously entered into and the diplomatic pressure currently being exerted to seize the 99 oil tanks owned by Sri Lanka, India is also seeking to introduce a term in the new loan which will remove the Ceylon Petroleum Corporation’s (CPC) monopoly over activities such as the sale of fuel, unloading fuel, and the sale of bunker fuel in the Trincomalee region and grant Lanka IOC (LIOC) the total control over such activities.” He further claimed that this is a “very dangerous development” for Sri Lanka and that a similar agreement was entered into under the previous government with China. “Under the terms of the agreement to sell the Hambantota Harbour signed by the previous government, CPC has no authority or power to sell fuel within a 100 km radius of the Hambantota Harbour. And this year Chinese companies have commenced supplying bunker fuel from the Hambantota Harbour and they have described it as a highly profitable venture,” Nagamuwa alleged. However, when The Morning Business reached out to LIOC Managing Director Manoj Gupta yesterday to confirm the veracity of the allegations made by Nagamuwa, he emphatically denied the said allegations.  “This is absolutely baseless and we completely deny it. There is absolutely no element of truth in it,” stated Gupta. Similarly Minister of Energy Udaya Gammanapila speaking to us, also denied the above allegations and described it as an “absolute lie”. GoSL has over the past few months sought credit lines from India and Oman to fund its fuel import purchases due to the dangerous foreign reserve position of the country. Sri Lanka’s foreign exchange reserves have, as per Central Bank data, fallen to $ 1.6 billion as of end-October from $ 2.1 billion in end-September.  In September, the GoSL had requested a $ 500 million credit line from India to sustain fuel supply to the island, amidst concerns that there would be a fuel shortage by the end of the year. It was disclosed to us last month by a senior Treasury official on the condition of anonymity, that the Export-Import (EXIM) Bank of India has handed over the relevant documentation relating to the credit line sought by Sri Lanka to the respective Indian parties for negotiation with the GoSL. However, Sri Lanka is yet to receive such documents from the Indian parties. The credit line from Oman for $ 3.6 billion which is expected to fund the purchase of fuel for a period of 12 months was granted Cabinet approval at the beginning of this month. However, it was reported that a proposal made by the Omani Government to grant them an offshore block in the Mannar basin to explore oil deposits, in lieu of the interest payments of the credit was rejected by the GoSL. 


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