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Sri Lanka targets gas in re-nationalisation drive

world Updated: Jun 17, 2010 15:56 IST

AFP
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Sri Lanka plans to buy back a majority stake in the nation's main gas network owned by Anglo-Dutch group Shell as part of a re-nationalisation programme, a minister said on Thursday.

The cabinet has approved a bid for the 51-percent of Shell Gas Lanka Limited, formerly the Colombo Gas Company, which was sold to Shell for 37 million dollars 15 years ago.

"Shell is trying to scale down in the region and they are planning to sell their operation in Sri Lanka," Media Minister Keheliya Rambukwella said. "We have decided to buy the company."

He said the state-run Bank of Ceylon has been asked to lead negotiations.

Earlier this month, Sri Lanka also announced that it was in talks with Dubai carrier Emirates to buy back its controlling interest in the island's national SriLankan airlines which was privatised in 1998.

The acquisitions are part of a policy of re-nationalisation drive.

President Mahinda Rajapakse won a resounding re-election bid in January and a new government was formed after parliamentary elections in April.

Shell announced plans to divest its operations on the war-scarred island last month as part of a worldwide strategy to review its business units in Europe, Asia and Latin America.

Shell's local rival, Laugfs Gas Lanka, had earlier shown interest in buying the operation.

Sri Lanka was mired in a 37-year ethnic conflict pitching government forces against Tamil separatist rebels in the north and east of the country. Fighting ended in May last year when the rebels were wiped out after a huge offensive.