India has agreed to develop three Sri Lankan wind farms on islets between the countries, officials said Tuesday, in a victory for New Delhi after the project was taken away from a Chinese firm.
India and Sri Lanka have signed an agreement on implementing hybrid power projects on three Sri Lankan islands off northern Jaffna, replacing the Chinese venture cleared by the Cabinet last year.
In January 2021, Chinese firm Sinosar-Etechwin was awarded the contract to install a hybrid renewable energy system in Nainativu, Delft or Neduntheevu and Analaitivu off the coast of Jaffna, but was reconsidered following objections raised by India. The three islets are located close to Tamil Nadu.
External Affairs Minister S Jaishankar, who is in Colombo for bilateral meetings and the BIMSTEC summit, and his Sri Lankan counterpart G L Peiris on Monday witnessed the signing of the MoU on implementation of hybrid power projects in three Islands off Jaffna, the Indian embassy said in a statement.
China last year suspended the project to install hybrid energy plants, citing “security concern” from a “third party”, amid reports of India raising concern over its location.
China is one of the biggest investors in various infrastructure projects in Sri Lanka under Beijing’s controversial Belt and Road Initiative (BRI). But there has been criticism, both locally and internationally, and growing concerns that China has lured Sri Lanka into a debt trap.
The island nation in 2017 handed over the strategically important Hambantota port to a state-run Chinese firm for a 99-year lease as a debt swap amounting to USD 1.2 billion
The contract awarded to Chinese company Sino Soar Hybrid (Beijing) Technology Co. Ltd, that had been awarded the tender to develop three hybrid power plants in the Delft, Nagadeepa, and Analthivu islands off the Jaffna peninsula has been cancelled.
“The government originally intended to carry out this project under a loan from an international financial institution, and a Chinese firm was selected through the standard bidding process, but the Indian Government has offered a 75% grant for this purpose, and, therefore, it has cancelled the contract said minister Duminda Dissanayake.
New Delhi has long been alarmed about the growing Chinese influence in the region. In 2020, 20 Indian soldiers and four Chinese troops died in a brawl on their disputed Himalayan border.
A $ 12 million project to build wind turbines on three small islands in the Palk Strait between Southern India and Sri Lanka was awarded to a Chinese firm in 2019, with funding lined up from the Asian Development Bank (ADB).
But after Indian protests about Chinese activity so close to its coast, work never began and the project on the islets of Nainativu, Analaitivu, and Delft was later scrapped.
A joint statement issued Tuesday after a visit to Colombo by India’s foreign minister said a Memorandum of Understanding had been signed to build the installations.
Sri Lankan officials said India had agreed to provide funding in place of the ADB.
Last week, the Chinese ambassador in Sri Lanka, Qi Zhenhong, expressed Beijing’s displeasure over the scuttling of the project and warned it would send a negative signal to potential foreign investors.
India is known to be suspicious of China’s growing political and economic influence in the South Asian nation, which is strategically located at the southern tip of the vast Indian sub-continent.
China and India have been competing for major infrastructure projects in Sri Lanka, which is currently facing its worst economic crisis since independence from Britain in 1948.
Colombo has asked for more loans from both nations to shore up its foreign reserves and import essentials including food, fuel, and pharmaceuticals.