Sri Lanka has signed a deal with Indian Oil Corp to sell retail petrol stations to the firm and lease fuel storage tanks in the east of the island, an official said on Wednesday.
India's giant state firm will pay about $62 million, one of the larger foreign investments in the country, for 100 petrol stations and nine oil depots, said M Nageswaran, the chief executive officer of Lanka IOC Ltd, a unit of IOC.
"We plan to modernise the stations to international standards," he said.
India's largest crude refiner has stepped up its business in neighbouring Sri Lanka this year under a government-to-government agreement after Colombo began a peace bid to end a 19-year ethnic conflict on the island.
Nageswaran said IOC planned to upgrade 12 fuel storage tanks in the eastern port of Trincomalee built by the British during World War II.
The government liberalised the petroleum sector this year and is in the process of divesting assets of the state-run Ceylon Petroleum Corp in storage and distribution.
CPC had a monopoly on refining, storage and distribution.
The peace process between the government and the Tamil Tigers has raised hopes of more investment flowing into the country.
Sri Lanka plans to allow a third entrant in the retail fuel market alongside CPC and IOC, and Caltex Lubricants Lanka Ltd, a unit of ChevronTexaco, has said it was interested.
IOC signed a one-year $100 million term contract in July to supply Sri Lanka with 30,000 tonnes of diesel and 10,000 tonnes of jet fuel a month.
Sri Lanka needs 3.4 million tonnes of petroleum products a year and has a refining capacity of about 2.2 million tonnes.
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