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Business

Trinco attracts foreign firms

India's state-owned Indian Oil Corporation last week signed an agreement with the Ceylon Petroleum Corporation to lease part of the China Bay oil tank farm in Trincomalee seen here in a picture taken by photographer M.A. Pushpakumara.

Foreign and local investors are considering a host of investments in and around the deep-water natural harbour of Trincomalee, a former British naval base that has once again attracted the attention of major powers, a team of journalists from The Sunday Times found during a visit there last week.

India is showing a keen interest in the port with Indian companies striking deals with the government for investments that look set to guarantee a permanent Indian presence there.

These investment deals, foremost among them being the lease of part of the China Bay oil tank farm to the state-owned Indian Oil Corporation (IOC), serve the strategic interests of New Delhi which has always been concerned about the use of Trincomalee by hostile powers.

The government is thought to be interested in attracting Indian investments into Trincomalee as some form of strategic deterrent against any overly ambitious moves by the LTTE to gain control of the port city which it has for long identified as the capital of their projected separate state.

The 1987 Indo-Lanka Peace Accord met India's concerns over Trincomalee and ensured it would not be used by hostile powers while giving New Delhi first choice in the use of the oil tank farm.

"In the last six months - after the ceasefire came into effect - there's been a lot of interest in Trincomalee," said Gamini Chandrasekera, the Sri Lanka Ports Authority (SLPA) Resident Manager in Trincomalee. "The most distinct advantage of this harbour is that there's no need for dredging - we have the natural depth," he said in an interview.
There is also no need to build expensive breakwaters in Trincomalee given the landlocked nature of the harbour.

Chandrasekera said that since the cease-fire between the warring sides came into effect, potential foreign investors have been scouting around the area. Trincomalee's main business currently is bulk shipments of commodities such as wheat and clinker for the Prima flourmill and the Tokyo Cement plant.

There is plenty of land available in and around the harbour with some 5,000 acres of state land being vested with the SLPA. The SLPA, which acts as the guardian of the land, is to release some 750 acres for an industrial zone.

An Indian firm called Venkatesh Coke and Power Ltd is negotiating with the Board of Investment to put up a plant that will produce coking coal for use in Indian steel mills. The plant is expected to handle around 60,000 tonnes a month. A 110 MW power plant is part of the project.

Another power plant - a 60 MW barge-mounted generator - is also being considered.
Canadian firm Portserv International Ltd, which has 40 mobile fertiliser bagging plants worldwide, plans to set up a quayside bagging facility at the SLPA's new berth being built at Trincomalee.

A foreign cement manufacturer, International Cement Traders, is considering setting up a plant to bag cement and sell in the local market. Despite the enthusiasm shown by investors to invest in Trincomalee, the uncertainty generated by the peace initiative has raised concern among investment officials.

There are fears that the proposed interim administration for the north-east, that looks likely to be dominated by the LTTE, could oppose investments unless they are given a big say in such investment decisions. Tamil leaders who back the LTTE are demanding that they be given a decisive role in decisions on future investments.

Board of Investment officials said there are fears that disputes may arise in the allocation of state land for planned investments.

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