Sri Lanka's oil firm workers call off strike over India deal

By Shihar Aneez

COLOMBO (Reuters) - Workers at Sri Lanka's state-run oil firm Ceylon Petroleum Corporation (CPC) called off a strike on Monday less than 24 hours in after the government agreed to consult them before signing an oil tank deal with India.

Thousands of Sri Lankan motorists queued for fuel earlier in the day after the workers went on strike to demand the government scrap the deal which trade unions say would give India too much influence over fuel prices.

CPC Managing Director Nadun Fernando said the unions agreed to call off the strike after six-and-a-half hours of talks that also involved Prime Minister Ranil Wickremesinghe.

"The government has agreed to consider the suggestions and proposals of trade unions and other stake holders before any decision on the operation of Trincomalee oil tank farm is taken," he told Reuters.

A trade union official said they called off their action after Wickremesinghe agreed in writing to consult them about the deal, which would put 99 oil tanks in the hands of Lanka IOC (LIOC.CM), a subsidiary of Indian Oil Corporation (IOC.NS).

Union leaders said there was speculation the deal could be finalised either when Wickremesinghe visits New Delhi on Tuesday or Indian Prime Minister Narendra Modi comes to Sri Lanka on May 11.

Sri Lanka has agreed with India to jointly develop and operate all the tanks in the oil storage facility in the port town of Trincomalee, near the world's second deepest natural harbour.

Lanka IOC already operates 15 of the oil tanks and the rest have not been used for decades.

For its part, IOC has agreed to build a second refinery with a capacity of at least 100,000 barrels per day (bpd) in Sri Lanka, while Modi pledged in 2015 to establish a petroleum hub in Trincomalee.

Unions at CPC said handing the tanks to Lanka IOC would give it too much influence over fuel stations.

"If they are given, they will have the control to decide the market prices," D.J. Rajakaruna, a CPC union leader told Reuters.

State Enterprise Minister Kabir Hashim said the unions had been given false information, as India and Sri Lanka had agreed to give 10 tanks to CPC while 74 were expected to be developed under a joint venture between CPC and Lanka IOC.

"It will be signed between the governments of India and Sri Lanka," he told reporters in Colombo.

A Lanka IOC official told Reuters that due to trade union pressure CPC would be allowed to use 10 of the 84 tanks earmarked for the joint venture between the two companies.

(Additional reporting by Nidhi Verma in New Delhi; editing by David Clarke)