The government will this week approve a proposal to lease the Trincomalee oil tank farms to the Indian government owned company Indian Oil.

This decision was taken by Prime Minister Ranil Wickremesinghe after extensive talks with India, both personally as well as through Economic Reforms Minister Milinda Moragoda.

Prime Minister Wickremesinghe last week directed both the Economic Reforms Ministry and the Power and Energy Ministry to submit the cabinet papers this week recommending the leasing of the oil tank farms to Indian Oil.

He has told his cabinet colleagues he hopes to sign the agreement while in India between June 8 and June12.

Prime Minister Wickremesinghe is to have a luncheon meeting with Indian Prime Minister Atal Bihari Vajpayee on June 12.

The Sunday Leader learns that with the leasing of the oil  tank farms
 to India, the government intends deregulating the oil market, encouraging competition with the Petroleum Corporation to bring down prices.

With the advent of Indian Oil to Trincomalee, the government is hopeful there will be greater stability in the east.

A team of experts from India were last week in Sri Lanka to do a study on the viability of the oil tanks.

Indian Oil on leasing the oil tanks is also expected to enter the market in Sri Lanka, with the government expected to open the market to other prospective investors in the oil market as well.

The Sunday Leader learns that negotiations with Indian Oil will be conducted through the Public Enterprises Reform Commission while the dealings with the Ceylon Petroleum Corporation will be handled through the Power and Energy Ministry.

Prime Minister Wickremesinghe discussed the leasing of the oil tank farms to India with both Power and Energy Minister Karu Jayasuriya and Economic Reforms Minister Milinda Moragoa last week, and obtained their unstinted support for the project.

The prime minister had said the leasing of the oil tanks will also provide an economic boost not only for the east but the entire country.

President Chandrika Kumaratunga it is learnt, is also expected to support the proposal given the good relations the PA enjoys with India.