Colombo India and Sri Lanka roped in the United Arab Emirates (UAE) on Saturday for an agreement to develop an energy hub at Trincomalee, including a multi-product pipeline and further development of a World War 2 oil tank farm partly held by the Sri Lankan subsidiary of Indian Oil Corporation.
The tripartite memorandum of understanding was among seven agreements unveiled after a meeting between Prime Minister Narendra Modi and President Anura Kumara Dissanayake, and marks the first time that India and the UAE will join hands for an energy project in South Asia. The UAE’s envoy to Sri Lanka, Khaled Nasser AlAmeri, joined the event where the MoU was announced.
“The UAE is a strategic partner for India in the energy space, and it was therefore an ideal partner for this exercise that is being done for the first time in this region,” foreign secretary Vikram Misri told a media briefing.
“What the exact contours of the UAE’s role will be is something that is going to be elaborated once business-to-business discussions kick off under this MoU.”
The three countries will choose business entities that will consider the financing and feasibility of projects for the energy hub, Misri said. A multi-product pipeline will be covered under the MoU, which could also lead to further development and use of the Trincomalee oil tank farms partly held by Lanka IOC.
In 2022, the Sri Lanka government, Lanka IOC, Ceylon Petroleum Corporation (CPC) and a joint venture between the two oil firms signed lease agreements for refurbishing and developing the 850-acre oil storage facility in Trincomalee, a natural harbour on Sri Lanka’s eastern coast.
The tripartite agreement is expected to boost India’s position after Chinese state energy firm Sinopec signed a deal to build a $3.2-billion oil refinery in Sri Lanka’s southern port city of Hambantota.
Misri said the tripartite agreement is also designed to ensure Sri Lanka’s energy security, provide energy at affordable rates, and possibly contribute revenues through export earnings of energy generated at the energy hub.
In recent years, the Indian government has made energy connectivity a crucial part of economic cooperation with neighbours, including Bangladesh, Nepal, Bhutan and Sri Lanka. India has provided loans and grants to build cross-border energy pipelines with Bangladesh and Nepal, and New Delhi has also helped develop hydropower projects in Bhutan.