Petroleum Deal with India to Ruin Lankan Economy, Cause Massive Unemployment and Turn It into another Ukraine
Posted on May 9th, 2017

Dilrook Kannangara

Deception is used again to get the India petroleum deal passed. Leasing or selling Trincomalee oil tanks is not the issue; ruining Lanka’s petroleum industry and making it dependent on India is the real deal. It will be an all round disaster with far-reaching consequences including war, riots and economic ruin. The deal must not be signed. If it goes ahead, it must be abrogated by a future government.

Economic Ruin

Petroleum retail market of the island is worth over $1 billion. At present Indian LIOC company has a 18% market share. CPC’s market share is 82%. With the proposed deal, the entire market will go to Indian companies. Local refineries also add value to the petroleum industry now. This too will be lost costing another $1 billion. Under the deal, oil refinery operations will be done in Andra Pradesh and refined petroleum will be distributed in Nepal, Sri Lanka, Bangladesh and Bhutan monopolizing their petroleum industry.

Indian petroleum hub in Andra Pradesh will be making all the profit from exports.

This is a profitable industry that keeps making profit despite neglect by successive governments. With the deal, all economic worth of the industry will go to India. It will worsen Lanka’s balance of payment by $2 billion annually. This has to be borrowed to bridge the balance of payment gap adding more interest cost and worsening the debt crisis.

Tens of thousands of CPC employees will be unemployed as the CPC will be routed economically. Indians will be holding all senior positions of LIOC and other Indian firms that replace CPC. Very few locals will be employed at managerial levels. All material cost, machinery cost, senior management cost, service cost, profit and management fees will go to India. Direct and indirect suppliers of CPC and banks will also suffer enormously. Economic ripple effects will be enormous. This is why most developing countries have state ownership of the petroleum industry.

Dangerous Energy Dependency on India                      

Most concerning is dangerous energy dependency on India. Energy is crucial to national security and the national economy. Petroleum is the largest power and energy source of the island nation. After the deal, within a few years, Sri Lanka will be at the mercy of India for its energy. India will use energy as a weapon to negotiate with Lanka on all matters of its choosing.


Pricing of petroleum and its dependents including electricity will be determined by India without regard to Lanka’s national policy. At present (apart from election gimmicks), the Lankan government manages pricing of kerosene, petrol, diesel and gas to stimulate the economy. This ability will be lost. India will be manipulating the economy and even elections using petroleum pricing as a tool. Increase in petroleum prices increases the cost and price of all goods and services!

In 1952 when the country was facing a serious food crisis, the government entered into the rubber-rice pact with China. Western governments vehemently opposed it and their petroleum companies threatened not to fuel ships involved in importing rice to the island and exporting rubber from the island. Prime Minister Kothalawala’s treasury secretary in turn warned against such action pointing out the likelihood of nationalization of oil companies. Fearful of repercussions, oil companies toed the line. However, given the strategic national importance, Prime Minister Sirima Bandaranaike nationalized them in 1963. It added an enormous value to the national economy and saved billions of dollars over the years in foreign exchange.

Trincomalee Turned into Crimea and Sri Lanka to Ukraine

Indians landing in Trincomalee can be equated to the Russian invasion and occupation of Crimea. In fact, it is far worse. Russia has some historical claims to Crimea but India has no historical claims to Trincomalee. Thereafter Sri Lanka will be turned into another Ukraine of total dependence and conflict.

Ukraine has two main ethnic groups – ethnic Ukrainians (native to Ukraine) and Russians (the largest minority). Largest group in Eastern Ukraine is the ethnic Russian minority. Russia has traditionally used the Russian minority to pull strings on Ukraine. In 2013, following the unconstitutional removal of the pro-Russian Ukrainian president (after a series of corruption allegations), a pro-western government was elected which decided to join the EU. As a sovereign nation, Ukraine has the right to come to any agreement with any country or organization. It is not Russia’s business to interfere. However, Russia interfered and invaded Ukraine grabbing strategically important Crimea including its ports. Russia also armed Eastern Ukraine Russian minority separatists to wage a war on Ukraine for separation. Civil war has ruined the economy of Ukraine. Today it is a de facto divided country along ethic divisions.

Ukraine also depends on Russia for gas for energy needs. Russia continuously exploits Ukraine’s energy dependency.

These events must ring a bell because this is exactly what is happening in Sri Lanka!

Accompanying the deal is an Indian project to link Mannar, Vavuniya and Trincomalee. North to this axis is Tamil-only. In 1970s and 1980s, India financed and armed Tamil terrorists that fought unsuccessfully against Sri Lanka to create a Tamil-only nation within the island. Sri Lanka relied on India’s rivals – China and Pakistan – for weapons to defeat the terrorist group in 2009. With the petroleum deal, Sri Lankan territory north of the axis will become the equal of Eastern Ukraine. Sri Lanka will have to contain Chinese economic deals. Otherwise, India will use the split to create havoc in Sri Lanka once again.

Just as Russia manipulated Ukraine out of the EU, India will force Lanka out of China’s Silk Road initiative.

Hambantota Port Becomes Unprofitable

Most profitable, rather the only profitable business line of Hambantota port is its bunkering facility. However, when India monopolizes petroleum industry in the island, Sri Lanka will be unable to sell fuel in Hambantota. India will price fuel high enough to make it unprofitable. Trincomalee will become the choice of refueling for a limited number of ships. With its most profitable line of business gone, Hambantota will automatically become an economic burden. China will either leave Hambantota or scale down its economic imprint. India will achieve its desired outcome without a war. Deprived of another vital economic asset, Lanka will reel in underdevelopment.

Tamil Eelam on Wings

Just as Donbas rebels assert Independence, Tamil separatists will assert Independence in the north. Trincomalee as the vital petroleum entry and storage point of the island, Tamils will make further extortionist demands. If Sri Lanka doesn’t cave in, Tamils will assert Independence which will disrupt petroleum movement. If Independence is reached, Sri Lanka will have to depend on Tamil Eelam for all petroleum and will pay a higher price as a mark-up. South Sudan and North Sudan are in a similar situation. South Sudan relies on North Sudan (its rival) to export crude at which point the North imposes various disruptions.

Sri Lanka will end up as Ukraine, Sudan or worse.


It is imperative that a future government nationalize all petroleum assets in the country once again. Otherwise, it will be the end of the island nation as we know it. Never-ending war, riots and disruptions will become the norm just as in Ukraine and Sudan. However, trying to nationalize them will not go without severe Indian pressure including possibly another military intervention. As executive presidents of the island nation lack the courage for bold action its prime ministers of the past had, nationalization threat will remain confined to election platforms.

It will be a new dilemma for the island torn along ethnic lines. Hidden in metaphorical small print of the deal is another Indian instigated war in the island. Other smaller neighbors of India will also become victims of India’s new petroleum hegemony.

5 Responses to “Petroleum Deal with India to Ruin Lankan Economy, Cause Massive Unemployment and Turn It into another Ukraine”

  1. Vaisrawana Says:

    A perfect analysis of an apocalyptic scenario that seems already unfolding. Let’s hope and pray that soon a countervailing force emerge to freeze it in its tracks. This is the time for patriotic politicians in all parties to forget their colours and creeds, and unite to stop the treacherous Indian juggernaut. One difference between MR’s massive Galle Face rally and the other less impressive rival rallies was that while MR’s crowds were mixed and unmarked in terms of colour, the others displayed mutual distinctions in their different colours. Disunity weakens; unity strengthens. The leadership that unites people is the one that should take over the country. Prospects of that happening any time soon are rather dim. Things are looking very dark. But let’s remember that ‘the darkest hour is just before the dawn’.

  2. Hiranthe Says:

    Excellent work and a warning. This is one of your best articles Dilrook, an eye opener. We should warn all Yamapalanaya supporters.

    We should print handouts with some more facts and distribute to public in SL about this grave danger. Hope we are not late!!!

  3. Ananda-USA Says:

    India is the SOURCE of ALL of Sri Lanka’s PROBLEMS: KEEP India OUT OF Sri Lanka!

    Controversies dog Modi’s second visit to Sri Lanka
    Tue, May 9, 2017, 06:16 pm SL Time, ColomboPage News Desk, Sri Lanka.

    May 09 (BDN) Indian Prime Minister Narendra Modi will be on a day’s visit to Sri Lanka on May 12 to be the chief guest at the Vesak celebrations, a UN-backed International Buddhist event in Colombo; and to inaugurate an India-built hospital in Dikoya in Central Sri Lanka, home to lakhs of tea plantation workers of Indian origin.

    Modi’s first visit in 2015 took place when his government in India and the Sirisena-Wickremesinghe government in Sri Lanka were new, and were enjoying a honeymoon with their respective subjects. But the Indian PM’s second visit is mired in controversy.

    A deep and growing resentment is palpable in Sri Lanka over India’s pushy bid to establish its presence in the island to counter China’s moves to find a foothold here.

    Admittedly China’s moves have also triggered some resentment, but reactions to India’s counter moves have been infinitely more severe. Both the majority Sinhalese and the minority Tamils have grouses against India and the Modi regime in New Delhi.

    The majority Sinhalese (70 percent of the population) are worried about the erosion of their country’s sovereignty as a result of the Indo-Lankan government proposal to sign an Economic and Technical Cooperation Agreement (ETCA). The signing of a wide ranging and comprehensive MoU on economic projects on Apr 25 this year, which has been presented to the Sri Lankan people as a fait accompli, has drawn flak.

    The Sinhalese fear that the India-funded economic projects could be Trojan Horses for Indian infiltration and arrogation of the country’s economic resources.

    As for the minority Tamils, they are disappointed that India under Modi, is more interested in economic development, trade and investment to further its own interests than in helping the Tamils secure post war economic, livelihood and political rights. The Tamils consider the latter to be India’s historical and moral responsibility flowing from a past in which India had shaped the issue to a great extent.

    Modi’s India thinks that economic development and economic integration of Sri Lanka under its aegis, will create opportunities for the Tamils to advance, and help soothe ethnic tension created by the 30 year war. But the Tamils think that constitutionally guaranteed political rights and devolution of power to the Tamil-majority areas will alone ensure ethnic reconciliation and integration, a line India had taken for 30 years but has abandoned now.

    The Sinhalese (who are 70 oercebt of the population) are anxious about India’s intentions, and the Tamils (12 percent of the population) are glum and indifferent, if not anxious.

    The Muslims (8 percent of the population) view Modi with disdain as a Hindutva zealot who is persecuting Muslims in India, especially Kashmir, and fighting against Pakistan, an Islamic country they have a natural affinity for.

    Though divided on many issues, especially rising Islamic fundamentalism in the island and the world, Sinhalese and Muslims look upon Pakistan as a true and consistent friend � a country which has stood by Sri Lanka during the Tamil Tiger terrorist era; supported it in international human rights forums; and refrained from interfering in its internal political affairs.

    However, the one million strong Indian Origin Tamils many of whom live in the tea plantations in the Central Highlands, are a different kettle of fish.

    The Indian Origin Tamils are happy that India is turning its attention away from the Sri Lankan Tamils of the Northern and Eastern Provinces and looking at them at long last. The hewers of wood and drawers of water of Sri Lanka are now feeling wanted by India. Modi will not only be inaugurating a 100-bed modern hospital to serve them but will also address them at a public meeting and go into a huddle with their leaders.

    The Indian Tamils not only have economic problems but are educationally backward. They need land rights and adequate electoral representation under the proposed electoral reforms. They demand delimitation of electoral constituencies in such a way that more of them can get into elected bodies from the provincial to the national level.

    The Indian Origin Tamil leaders are expected to take up these issues when they meet Modi. And in all likelihood, Modi will take them up with President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe when he meets them next.

    But this is not to the liking of the Sinhalese majority. CA Chandraprema, political commentator in The Sunday Island has already dubbed the Indian Origin Tamils as “India’s fifth column” in Sri Lanka.

    Commentators like Chandraprema and Dayan Jayatilaka have strongly objected to the MoU signed in New Delhi on April 25 which lists a number of projects in which India is to collaborate with Sri Lanka. Though these are “Joint Ventures” for the development of the energy, ports and other sectors in Sri Lanka, the Sinhalese nationalists view them as arrogation of vital sectors by India. They fear that Sri Lanka’s strategic assets will be partially if not fully in India’s hands in due course.

    India is to refurbish and use 85 giant World War II vintage oil tanks in Trincomalee, each with a capacity of 12,000 mt, as a Joint Venture with the Ceylon Petroleum Corporation. But this is seen by Sri Lankan nationalists as alienation of a national asset. The Sri Lankan parliamentary Committee on Public Enterprises (COPE) had only recently called for the cancellation of the 2003 agreement by which a total of 99 giant oil tanks in Trincomalee were handed over to India for development and use.

    The April 25 MoU on economic projects talks of setting up power plants using LNG jointly with India; and developing the Trincomalee port and the Eastern Terminal in the Colombo port. Plans have been drawn up for establishing industrial estates jointly in several parts of Sri Lanka.

    But India’s interest in the Eastern port of Trincomalee and building a highway to link Mannar in the North West with Trincomlee is the North East is seen as a way of establishing Indian presence in the Tamil-majority North and East which have traditional ethnic ties with Tamil Nadu state in India. The alleged plan to build a bridge between India and Sri Lanka across the Palk Strait in the North West, has been dubbed “traitorous” by Dayan Jayatilaka.

    Sri Lankans also fear that along with Indian financial and technical aid will come Indian service personnel who will take away jobs from Sri Lankans. This is the reason why Sri Lankan trade unions and professional bodies are opposing the Economic and Technical Cooperation Agreement (ETCA) even though the proposed agreement does not envisage personnel movement across borders except in the ship building and IT sectors.

    Sri Lankan professionals have been asking the government to spell out a National Policy on foreign trade and investment agreements and demanding prior consultation on these. But till date, no national policy has been drawn up and consultations have only been perfunctory.

    This, along the alleged bid to hand over 99 oil tanks to India, triggered a crippling nation-wide petroleum workers strike a day before Prime Minister Wickremesinghe went to India to finalize the MoU. which was signed on April 25. More recently, in May, there was a nation-wide one-day strike against ETCA.

    Experienced Indian diplomats and senior Sri Lankan ministers are skeptical about the implementation of the Apr 25 MoU and the signing of ETCA. Former Ambassador M Bhadrakumar says that signing of MoUs by India have meant nothing as hundreds of them are languishing unimplemented.

    Patali Champika Ranawaka, Sri Lankan Cabinet Minister of Megapolis (urban development), says that the Indian public and private sectors are very tardy in implementing projects in Sri Lanka. The Chinese and Koreans are far better and quicker he says. Many existing projects are languishing and some have been cancelled, Ranawaka points out.

  4. Dilrook Says:

    Thank you for comments. Apocalyptic indeed!

    I’m afraid it gets much worse.

    These are India’s largest export industries. Carefully look through them to identify how expansion of these will destroy corresponding Lankan industries.

    1. Gems, precious metals: US$43 billion (16.5% of total exports)
    2. Mineral fuels including oil: $27.7 billion (10.6%)
    3. Vehicles: $15 billion (5.7%)
    4. Machinery including computers: $13.6 billion (5.2%)
    5. Pharmaceuticals: $13 billion (5%)
    6. Organic chemicals: $11.3 billion (4.3%)
    7. Clothing, accessories (not knit or crochet): $9 billion (3.5%)
    8. Electrical machinery, equipment: $8.2 billion (3.1%)
    9. Knit or crochet clothing, accessories: $7.9 billion (3%)
    10. Iron, steel: $6.4 billion (2.5%)

    (Source: “”)

    India is the source of all our problems.

    The only solution is to have a Chinese military presence in the island. Sadly, some fools (calling them patriots) are opposed to this and these fools are searching for a non-existent and elusive middle ground in Lanka-India relations. If they were not so daft, they would have realised by now that there exists no such middle ground in India-Lanka relations. India’s mottos is – you are either with us (to exploit you to the maximum) or you are with them. What other country has more disputes with all its neighbours than India and what other country has nuclear weapons pointed towards them from both sides!

    Just as Ranil, Sirisena and others of this regime must take responsibility for this economic apocalypse, those patriotic fools that oppose/d Chinese military bases in Sri Lanka must also take the blame. They are Ranil’s bedfellows.

  5. Fran Diaz Says:

    INDIA will always try to have a foothold in Lanka to stop Lanka’s zesty run with the West !
    It started with the JRJ govt and INDIA forcing the 13-A on the JRJ govt in 1987, followed by training of the LTTE in Tamil Nadu. Then came nearly 30 years of destruction, death & mayhem in Lanka ….
    Solutions needed now, not more of the same.

    Suggestion : Have an MoU with the UN Security Council that Lanka will not jeopardise INDIAN Security Issues in any way, and vice-versa.

    It must not be forgotten that the area called INDIA suffered greatly under Colonisation, and they will do their maximum to avoid such a situation.

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