Features
Contradictions in Trinco oil tank deal
By Neville Ladduwahetty
According to media reports the government of Sri Lanka (GOSL) has signed three new Agreements, dated 6 January, 2022 relating to the Trinco oil Tank Farms. The first with the Ceylon Petroleum Corporation (CPC), the second with the Lanka IOC PLC (LIOC), and the third with a Joint Venture Company incorporating the CPC holding 51% and LIOC holding 49% called Trinco Petroleum Terminal (Pvt.) Ltd. The three Agreements relate to the ninety-nine (99) Oil Tanks built during WWII on the basis of State leases, for a period of fifty (50) years. The first relates to twenty-four (24) tanks, the second to fourteen (14) tanks and the third to sixty-one (61) tanks.
As stated by the Minister of Energy Udaya Gammanpila, this current agreement is an outcome of the three previous agreements. In the course of an interview, he stated that the first was when “President J. R. Jayewardene agreed with India to develop and operate this tank farm jointly with India, so we have a bilateral obligation with India to develop jointly”. The second was when “Prime Minister Ranil Wickramasinghe, on 7 February 2003, leased out these tanks to India for 35 years. That is how they came into possession of these tanks. The third was when “Malik Samarawickrama – Sushma Swaraj MoU agreed with India to lease out the entire tank farm of 99 tanks to LIOC for a period of 99 years” (The Sunday Morning, January 16, 2022).
Minister Gammanpila has also said, “Sri Lanka was under obligation to India in respect of this tank farm through these three agreements. I had to negotiate with India in this backdrop. If I could ignore these agreements, I would have taken the entire tank farm into Sri Lanka’s possession; I would love to do that. Unfortunately, there are three agreements signed by previous governments and I am bound by them” (Ibid).
To claim that Sri Lanka is obligated by all three previous agreements is not only to assign equal status to all but also to accept the contradictions in the terms among the three agreements. For instance, the first agreement between Sri Lanka’s Head of State and the Prime Minister of India has no time bar while the second is by a Prime Minister of Sri Lanka to lease the tanks to India for a specified period of 35 years and the third, an agreement to lease all the tanks for 99 years, not to India but to a State entity of the government of India, LIOC. Furthermore, the first agreement was to develop the tanks jointly while the other two are on the basis of leasing them. Perhaps, India did not make an issue of violating the terms of the Indo-Sri Lanka Accord because the subsequent agreements are more favourable to it.
The specifics of the latter two agreement are not available to the public. Even if their contents are available to the Minister and he was aware of the circumstances that caused a lease for 35 years with the State of India to be extended for 99 years to an entity of that State as being of equal standing as the Indo-Sri Lanka Accord, this is not a tenable proposition. Furthermore, the Indo-Sri Lanka Accord is not limited to the oil tanks, whereas the other two agreements specifically relate only to the tanks. Therefore, as far as the tanks are concerned, there is every justification to address issues relating to them from a totally fresh perspective.
Minister Gammanpila claims this deal was a major achievement. The reason for such a claim is that until the agreements of January 6 2022 were signed, all 99 tanks had been leased either for 35 years or 99 years depending on which agreement one considers to be valid. Therefore, the agreement of January 6 2022 is a considered a gain because it regained 85 tanks that were in the possession of LIOC. Furthermore, the fact that 24 of the 85 would be exclusively operated by Sri Lanka and 61 jointly means a decided improvement. However, it must be clearly understood that the so called “gain” is only in respect of the tanks taken in isolation and not as part of a viable asset.
Could Sri Lanka have done even better and taken over all 99 tanks to be developed by Sri Lanka, while leaving the 14 tanks currently operated by LIOC for the remainder of the 35-year lease period as a measure of good faith? Since the provision of the Indo-Sri Lanka was for operating the entire Tank Farm jointly, and the agreements of 2003 and 2017 violated this provision, a claim could be made that sufficient grounds existed to take possession of all 99 tanks; a wish the Minister himself entertained during his interview.
REVISITING the AGREEMENT and its TERMS
How best to exploit the potential of these tanks has been the topic of much discussion and debate. However, the majority of these discussions have focused on these tanks as a legacy of World War II and how best to exploit its potential. It cannot be denied that taken in isolation, these tanks are nothing but 99 rusting steel tanks without much utilitarian value.
It is only in the context of its location that these tanks take on a whole new dimension and come alive as a vital economic asset because of its proximity to one of the best natural harbours in the world – the Trinco Harbour. Therefore, it is the Trinco Harbour that make these tanks a valuable asset.
These tanks were sited at this particular location because of the Trinco Harbour. Therefore, the tanks cannot be considered in isolation and independent of the Trinco Harbour. The tanks and harbour are inextricably linked and therefore it is absolutely vital that the tanks and the harbor are considered and treated as a single asset and not as separate assets. On such a basis, for the LIOC to hold 49% stake in the joint venture should be unacceptable because it amounts to the harbor being a give-away – a free gift to which a value cannot be assigned. Furthermore, the fact that the tanks amount to nothing but 99 steel containers without the harbour, strong grounds exist for Sri Lanka to revisit the deal and take possession of the tanks because the asset that transforms the tanks into an economically viable asset is the Trico Harbor, which is not associated with the deal.
Having taken possession of the tanks, Sri Lanka should perhaps restore a few tanks per year by seeking funds through local banks and pay back the loans by renting them to interested parties such as the LIOC and others who may find it profitable to store petroleum products when prices are low. Such an approach would be in keeping with the current government’s policy of self-reliance. Furthermore, the pace of restoration could be undertaken to keep in pace with the demand from interested parties.
CONCLUSION
The current agreement signed on 06 January 2022, which entitles Sri Lanka to operate 24 tanks exclusively and 61 tanks as a joint venture with India is decidedly an achievement over the agreements of 2003 and 2017, which leased these tanks for 35 and 99 years, respectively. However, the implication of these agreements is that both India and Sri Lanka have agreed that deviating from the basis of developing the tanks jointly as stated in the Indo-Sri Lanka Accord is acceptable.
All these agreements relate to the 99 tanks that by themselves amount to nothing but steel storage containers without much utility value. However, they have the potential to be transformed into a vital economic asset because of their proximity to one of the best natural harbours in the world – the Trinco Harbour. Therefore, any agreement relating to the tanks should take into account the fact that without the Trinco Harbour the tanks by themselves have little value. Consequently, the tanks and the Trinco harbour should be treated as a single asset and not as separate and unrelated assets. Under the circumstances, a share distribution of 51/49 favours India disproportionately because the asset that makes the enterprise a viable venture, namely the Trinco Harbour, belongs to Sri Lanka. It is this aspect that makes the 06 January2022 agreement unacceptable because the asset value of the Trinco Harbour has been totally disregarded.
Coupling such a context with the policy to deviate from the concept of jointly developing the tanks into one of leasing in the agreements of 2003 and 2017 gives Sri Lanka the opportunity to renegotiate and take possession of all 99 tanks, but permits LIOC to continue operating the 14 tanks until the current lease period lapses. Having renegotiated a fresh deal, Sri Lanka should restore a few tanks at a time with finances from local Banks, and pay back the loans by renting them to interested customers to store petroleum products.
Such a strategy would be in keeping with the spirit of self-reliance that has been with the Peoples of Sri Lanka and manifests itself occasionally, the most recent being the demand for Sri Lanka to construct the East Container Terminal that the Government intended to outsource. The spirit of self-reliance is not dead. Its resurgence awaits leadership. It is in such a spirit that the Trinco Tank Farm deal should be revisited.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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