Wednesday, April 23, 2008



(This may please be read in continuation of my earlier article of November 13,2007, titled "Iran to Fund Sri Lankan Arms Purchases" at )

President Mahmud Ahmadinejad of Iran is to visit Sri Lanka for two days from April 28,2008, in response to an invitation from President Mahinda Rajapaksa, who had visited Iran in November,2007. His engagements will include the inauguration of the construction of the Iranian-funded ( US $ 450 million) Uma Oya hydroelectricity project at Wellawaya in the Monaragala district. When completed, the project is expected to produce 100 megawatts of electricity. The visit is also expected to result in the finalisation of an agreement for Iranian financial and technical assistance for enabling the Sapugaskanda oil refinery to handle Iran’s light crude. This project is expected to result in a further Iranian investment of US $ one billion.

2. In this connection, quoting Sri Lankan media, the "Teheran Times" of April 20,2008, reported as follows: "Iran will increase its investment in the expansion project of an oil refinery in Sri Lanka up to US$ one billion, Petroleum and Petroleum Resources Development Minister A.H.M. Fowzie said. According to the IRNA office in Tokyo, Fowzie in an interview with Kyodo on Wednesday said: "Iran's President Mahmoud Ahmadinejad has allocated this amount which would cover 70 per cent of the required investment for the refinery's expansion, in the form of a 10 year loan, with a five year exemption period from payment of the loan's instalments." Fowzie added: "Iran had earlier too provided the oil we need free from interest for four months." According to the report, Iran is the largest provider of crude oil to Sri Lanka. According to the Kyodo report, Managing Director Ceylon Petroleum Corporation (CPC) Ashantha De Mel has said that the pilot study for increasing the production of Sri Lanka's only refinery from 50,000 to 100,000 barrels per day has been completed by Iranian oil engineers. De Mel added: "Iran would make the major part of the required investment for expansion of this oil refinery (70 per cent) and the CPC would cover the rest (30 per cent)." Fowzie said the project would yield noticeable benefits for its investors. He said: "From the economic point of view my affiliated ministry too is interested in making investments there." According to Kyodo, De Mel who visited Iran in early April 2008, expects the project's executive phase to begin within the next three to four months. Oil experts predict that Sri Lanka's oil refinery would increase its production after the Iranian oil engineers would end their work within the next two to three years."

3. Iran has also agreed to provide low-interest credit to Sri Lanka to enable it to purchase military equipment from Pakistan and China and to train a small group of Sri Lankan Army and intelligence officers in Iran. A team of about 10 officers has already proceeded to Iran for training after a clandestine visit to Sri Lanka by Brigadier Gen. Qassem Suleimani, the Director-General of Iran’s Quds Force, or the Jerusalem Brigade, which is, inter alia, responsible for covert actions against Israel and for liaison with friendly foreign intelligence agencies. He is expected to come again as a member of the entourage of the Iranian President for further discussions on intelligence co-operation between the two countries.

4.According to reliable sources, Israel is reported to have expressed to Colombo its concern over the developing relations between Sri Lanka and Iran and warned that this could come in the way of supply and sale of Israeli military equipment to Sri Lanka in future. It has been reported by these sources that Sri Lanka has already shared with the Iranian intelligence copies of the instructions, training and maintenance manuals of the Israeli equipment purchased by it in the past and allowed some officers of the Quds Force to inspect the Israeli equipment. (23-4-08)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: )

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