FINANCIAL CHRONICLE – Sri Lanka hopes the renovation of the oil tank farm in the island nation’s Eastern port district of Trincomalee, with an India, UAE, Sri Lanka tri-partite agreement, could be a long-term solution for the fuel shortage.

The Trincomalee Oil Tank Farm, also known as the China Bay Tank Farm, is a massive World War II-era strategic asset consisting of 99 serviceable tanks with a total storage capacity of nearly one million metric tonnes.

Located near one of the world’s deepest natural harbours, the facility has long been a focal point of Indo-Lanka relations, first formalised in the 1987 Indo-Lanka Accord.

Despite its immense potential to turn Sri Lanka into a regional energy hub, the project faced decades of stagnation due to political, trade union, legal as well as bureaucratic resistance, along with opposition from nationalists.

In April last year, the UAE Ministry of Investment, the Indian Ministry of Petroleum and Natural Gas, and Sri Lanka’s Ministry of Energy signed a trilateral Memorandum of Understanding (MoU) to jointly develop Trincomalee into a strategic energy hub to enhance the country’s energy security.

However, the development is yet to see the complete renovation of any tanks.

“We entered into a trilateral agreement with Sri Lanka, India, and the UAE last April to renovate the Trincomalee oil tanks. Accordingly, the three countries are carrying out new work there,” Cabinet Spokesman Nalinda Jayatissa told the weekly cabinet press briefing on Tuesday (16).

“We hope that we will find a solution to the immediate crisis and our long-term answer lies in increasing this storage,” he said referring to the current fuel shortage due to the crisis.

Sri Lanka can only store fuel for nearly a month under current storage conditions.

“If we can store more oil, we can go from 25-35 days to 60. Those new works are actually being carried out by the Ceylon Petroleum Corporation (CPC). We have allocated approximately Rs. 32 billion in the next 3 years,” he said.

Large Capacity

The Oil Tank Farm which has 99 tanks with the capacity of 10,000 metric tons each, was built in the World War II era on a 600 acre land adjacent to Trincomalee port in Eastern Sri Lanka.

Out of 99 tanks, Sri Lanka’s state-owned CPC owns 24, while Lanka OIC, a fully-owned subsidiary of Indian Oil Corporation is handling 14 tanks. The rest of the 61 tanks are expected to be renovated under the tri-partite deal.

The agreement sets a framework for collaboration on a range of infrastructure and energy projects in Trincomalee, including the refurbishment and development of the Trincomalee Tank Farm, bunker fuel supply initiatives, and the possible development of a new refinery project.

As part of the implementation of the refinery project, the UAE, India and Sri Lanka have designated their authorised agencies, respectively Abu Dhabi Ports Group PJSC (AD Ports), Indian Oil Corporation Limited (IOC) and CPC.

These agencies will establish a Joint Venture Company to oversee project execution.

The agreement also includes the construction of a bi-directional petroleum pipeline between India and Sri Lanka, strengthening regional logistics and fuel security.

The project is managed by Trinco Petroleum Terminal (Pvt) Ltd (TPTL), a joint venture where the CPC holds a 51% majority stake and Lanka IOC holds 49%.

Under the new tripartite framework, these agencies work alongside UAE investors to ensure the facility can store for longer duration. (Colombo/March 18/2026)