Sri Lanka looks to India-backed Trincomalee project amid energy crisis

Redeveloping the Second World War-era oil tank farms in Sri Lanka’s eastern Trincomalee district is the “permanent solution” to the energy crisis, Foreign Minister Vijitha Herath said, adding that the government was taking steps to expedite the project backed by India and the United Arab Emirates.

“Temporary solutions are not sustainable, we need a long-term strategy to deal with oil storage and distribution given the global energy situation,” Mr. Herath told The Hindu on Saturday (March 21, 2026), reiterating his recent Parliament address.

“That is why at the very beginning, our government signed the MoU with India and the UAE.,” he said, referring to the Memorandum of Agreement signed by the three parties in April 2025, during Prime Minister Narendra Modi’s visit to the island nation, to develop Trincomalee as an energy hub.

The move drew attention as one of the first major MoUs on strategic projects, signed by the Anura Kumara Dissanayake administration after its big win in the November 2025 general elections. The move is widely perceived as a big shift, since the leftist Janatha Vimukthi Peramuna (JVP), the main constituent of the ruling National People’s Power, had long opposed Indian involvement in the project.

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After the signing of the MoU nearly a year ago, the three parties have met once, and Sri Lanka has put forward a concept note for the other two partners to respond to, sources familiar with the discussions said. “There are some technical aspects being addressed by the Energy Ministry. Once that is done, a tender process will be initiated to bring in investors,” Mr. Herath said, adding that the government was working to “expedite the process”.

For over four decades now, since the Indo-Lanka Accord of 1987, New Delhi has been negotiating the redevelopment of the strategically located oil tank farms with various governments in Colombo. However, the project has seen little progress beyond initial agreements. However, the current energy crisis, which threatens to severely disrupt global supply chains and economies, has put the once-contested project back in the spotlight.

Although Sri Lanka does not import fuel through the Strait of Hormuz — its sources are India, Malaysia, South Korea and Singapore — the closure of the strait impacted global supply, Minister Herath told Parliament last week. “When a situation like this erupts…the entire country must face the ramifications. We are facing that same situation today,” he said, while speaking on Sri Lanka’s response to the crisis in West Asia, including Colombo’s refusal to entertain requests from both the United States — ground access to its war planes — and Iran, which sought port calls for its vessels.

Amid escalation in the war in West Asia, following the United States and Israel’s attack on Iran, and its retaliation, Sri Lanka switched to a digital QR code-based system to ration fuel sales last week, in what authorities called a “precautionary measure”.