Indian oil block grant not linked to railway

Reports which surfaced this past week that Sri Lanka offered an oil block to India in the Cauvery Basin in return for the construction of a railway route stretching from Colombo to Matara has been refuted by Minister for Petroleum and Petroleum Resources, A.H.M. Fowzie.

“Oil blocks have been given to both India and China on a 'nomination basis' due to the close friendship between the nations,” said Fowzie to The Sunday Times FT, adding that the government also asked for a deposit of US$ 100 million from both India and China. He stressed that this had nothing to do with the Colombo-Matara railway track.

He said the details surrounding the oil blocks was yet to be finalised and no payment was made to Sri Lanka from either India or China. "Within the next six months, we are calling for tenders and preparing our proposal which will be discussed by a technical committee."

Fowzie said once the proposals are drawn up by the technical committee, it would be presented to the Cabinet for approval. “An advance will be paid to Sri Lanka on the US$100 million from India and China but we cannot give a time frame as to when the transaction would be made.”

The Sunday Times FT previously reported that the data from 2D seismic surveys which were conducted in the Mannar Basin by Norwegian company TGS NOPEC were purchased by Sri Lanka for US$10.5 million.

Officials at the Sri Lanka Railway Department also confirmed that the construction of the Colombo-Matara railway is in no way connected to the oil block to India. "It is two different subjects. There are some steps taken on rehabilitation of existing coastal lines with Indian line of credit. Some feasibility studies are being done," the official said. "The Indian government has offered to Indian line of credit to rehabilitate southern coastal railways," he said. "An Indian team of experts are expected to arrive in Sri Lanka for a further study." He said rehabilitation of the railway was expected to start in 2006 but was delayed. “The estimate for this project this year is just over US$200 million and it is divided into about two or three stages, the first of which will cost nearly US$100 million.
(NG)