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Indian Oil and American ACSA

by Nanda Gadage
The government ought to be congratulated for the two initiatives it has taken to ensure the security of the country. The Indian government it was that wanted to restore and manage the Trincomalee oil tank ‘farm’ as a joint venture (article 2. 111 of the letter exchanged between Prime Minister Rajiv Gandhi and President Jayewardene). Though the letters were exchanged on the 29th of July 1987, the Indians showed no further interest in the matter. In 1996 when a Singapore company was interested in restoring ten tanks and leasing them, the Indians when consulted, restated their "continued interest" and blocked the Singapore ‘proposal’. The Indian action was at the time described as being in the manner of the dog in the manger. To many the consultation with India was considered unnecessary, as the Indo-Lanka Agreement was already passe. Though we had performed under it and passed the 13th Amendment, the Indians had been able to disarm the LTTE nor had they discharged their obligations under article 2.16(B) which read as follows: "The Indian Navy/ Coastguard will cooperate with the Sri Lanka Navy in preventing Tamil militant activities from affecting Sri Lanka." The LTTE has since that Agreement was signed brought in weapons at will (it was only the ships Yahat and the Comex Jous carrying weapons for the LTTE that were intercepted).

The oil tank farm awas from a strategic point of view, important in Cold War years bur after 1956 we opted for Non-Alignment and left the tanks to rot even though it was a goof commercial proposition to develop the tank for. Even in 1978 when it was still a good commercial proposition the government of President Jayewardene was prevented from leasing out the farm to those interested. It is indeed therefore wise on the part of the government to have revived the project. It is also wise on the part of the Indian government to develop the Tank farm. It may perhaps not be a wholly lucrative proposition at present but it has unquantifiable benefits for India in the years ahead. It is certainly not a project that should be viewed as a mere commercial proposition by the Indian Oil Corporation. Its benefit to India must also be assessed by their Defence establishment and their Foreign Policy establishment. The year 2020 and the rise of Asian super powers is not far away. It was an assessment of India’s national interest that in the first place decided on the matter figuring in the ‘Exchange of letters’. It appears from the documents published that the revival of the proposal was an initiative of the PM and Minister Moragoda our congratulations should go out to them.

A few matters however seem to need clarification. The Cabinet Paper refers to a joint venture with a reputed Sri Lanka company. This specification could to my mind create problems. Indian Oil should be free to choose its partner for the JV. Why should not the CPC be the JV partner, does the government have a ‘reputed company’ in mind? Would such a company invest money in an undertaking of this nature which may not be profit oriented? It has been mentioned to me that the government will explore the possibility of having ‘Institutions al investment, but would this be fair by them. Could not this requirement no delay the realization of the project. Further if as stated in the Cabinet Paper "If the IOC is unable to make use of these tanks initially, it (that is the IOC, my parenthesis) is unable to make use of all these tanks initially, it would be permitted to rehabilitate the tanks and lease out those not required to other potential users". Does it not follow that it is logical that the oil tank farm should be leased to a wholly owned subsidiary of IOC incorporated in Sri Lanka under the BOI Law. Such an arrangement would be an incentive to the IOC.

On the subject of incentives, despite the fact that the CPC has been making huge losses and not merely because of high oil prices, it is a worthy initiative of the government to introduce foreign competition in the are of petroleum distribution. The proposition should be attractive to the IOC for the Indian government has to explain its actions in Parliament. In this regard I wonder whether one hundred ‘filling stations’ would be an adequate incentive. For much too long have we suffered at the hands of the monopoly Corporation which has given us poor service.

The privatization of gas by the previous government was done in a manner which, if it had happened in Singapore, would have resulted in those responsible going to jail. It was a wholesale sell out. We are still reeling from that stupid act. I wonder who in PERC benefited from that exercise-it was certainly not us the consumers. New and more competition should secure benefits to the consumers.

The second initiative is also of the utmost significance. The entering into the "Acquisition and Cross Servicing Agreement" with the US. This is not some unique agreement calculated to pull us into any orbit, over fifty countries have already signed this same agrement. It is a useful tool to support our military in their engagements. It has also a multi-national dimension. It is an agreement under which the US is committed to provide logistic support, supplies and services to military forces of the country with whom she has an agreement. If countries in the region are unable to help us with military support, as we discovered to our horror when the Tiger was at our door, we must be free to enter into Agreements with any country that would help us, so long as such help is not detrimental to the interests of our neighbours. In this instance that question does not arise as the the US has the closest of relations with India which the latter would not deny.

The previous administration had a huge hang-up about the United States. I recall how they reacted to a proposal to have the MPRI (one of the world’s best military training outfits) train our security forces to upgrade their skills. The same organization offered to help us organize our Intelligence system (the head of MPRI was the retired Defence Intelligence chief of both Presidents Regean and Bush Snr).

That administration (and its Secretary of Defence) perhaps steeped in prejudice did not have the capacity to understand or appreciate the significance of having the US in our corner in our fight against terrorism. Because of their sins thousands of our brave soldiers rode into the valley of death. Do hope that those who were responsible would remember them till they die.

I trust the reader would pardon me if I digress for a moment to deal with another matter. In a recent article I called for the merger of the armed services of this country because they have indeed failed to ensure that our security and territorial integrity was safeguarded.

Some retired General, and we have so many of them now, (from the era when they fought ‘ganja’ wars) has taken me to task for a reference to an old soldier (a good and warm hearted man no doubt) and also my passing reference to the men who disgraced the armed services by seeking to overthrow the legally elected government through a Coup. The man who responded should have addressed the main issue and given us the benefit of his thoughts. He has instead referred to ‘silera’ issues. I do most sincerely hope the Prime Minister would address this issue and merge the three services. There is no need to pamper to egos anymore.

To revert to our subject. There should be no dragging of feet on the matter of signing the agreement with the US, which should be entirely in our national interest. Over 50 countries have signed the same agreement. We need to establish the closest of links not only with India but also with the US. India herself has the closest of military relations with that country.

There are not only joint high level military consultations but they also hold joint exercises. India purchases high tech weapons from the US. In these circumstances I am certain that India would welcome closer cooperation between Sri Lanka and the US Which would not only be in the interest of regional security but would also help strengthen US-India ties.


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