Cairn Lanka Exempted from Taxes and Import Duties

Cairn Lanka Private Ltd will be exempted from all taxes and duties, till 2016, on the importation of equipment, machinery and other materials to be used in their offshore oil exploration work in the Mannar Basin, according to the regulations passed in Parliament on August 10, 2011 with 58 votes to four.

The regulations were introduced by Economic Development Minister Basil Rajapaksa under the Strategic Development Project Act.

The Democratic National Alliance (DNA) called for a division on the regulations, and subsequently it was put to a vote.

DNA Group Leader Anura Kumara Dissanayake in a hard hitting speech said that if crude oil were found, the government would receive only 10 percent of it according to the agreement signed with this Indian company.

Mr. Dissanayake said that the government would have been able to get 38 percent of the profit had the tax concessions not been granted.

"One cannot take this lightly as it concerns the country's most valuable resources which belong to future generations," he said.

He also charged that the government had signed this agreement without following tender procedures as stipulated. However Economic Development Minister Basil Rajapaksa who countered Mr. Dissanayake's assertions said the clauses in the agreement were in accordance with internationally accepted norms relating to such transactions.

Mr. Rajapaksa said there was a certain way of sharing profits in the case of agreements of this nature. He said it was somewhat similar to profit sharing in gem mining. The minister said that if a gem were found, the owner of the land could not get the total benefit. He said the license holder and providers of machinery were also entitled to a share.

Mr. Rajapaksa added that it was the duty of the government to see that all aspects which the foreign investors looked at before deciding on an investment were in order. He said the investors looked at the investment security, the concessions they could enjoy and a variety of other criteria.