India replaces China in Agreement with Sri Lanka to Build 3 RE Farms

India has signed a Memorandum of Understanding with Sri Lanka to build hybrid power projects in the island country, a joint statement has revealed. The development has come after the Sri Lankan government ousted the Chinese company approved last year from these very projects recently.

The projects envisage the construction of three wind turbine farms in the three small islets of Nainativu, Analaitivu and Delft in the Palk Strait. The region lies between the southern Indian coast and Sri Lanka.

For a long time, India has been raising the alarm about the growing Chinese influence in Sri Lanka. The hybrid power projects were awarded for $12 million to a Chinese venture, Sinosar-Etechwin, in 2019 and the requisite funds were to come from the Asian Development Bank (ADB). But when India registered its protests with the Sri Lankan government, the work never began, being scrapped altogether later.

India stated that the installations were bringing the Chinese too close to the Indian state of Tamil Nadu.

During Indian foreign minister S Jaishankar’s ongoing visit to Sri Lanka, the joint statement was issued, announcing the inking of the MoU regarding the renewable projects. Officials have also confirmed that India has agreed to fund the projects, which means that ADB’s help will not be required now.

Qi Zhenhong – the Chinese ambassador to Sri Lanka – had expressed the displeasure of the Chinese Government over ousting the Chinese firm from the project. He also said that the act of Sri Lanka would send a negative signal to potential foreign investors.

Sri Lanka is in the midst of its worst economic crisis since independence. It has been reaching out to both India and China for financial assistance and the two countries have also been competing for involvement in Sri Lankan infrastructural projects.

Last June, India extended a line of credit (LOC) to Sri Lanka for solar power projects. India’s NTPC signed an agreement with the Ceylon Electricity Board (CEB) two weeks ago to develop a 50MW solar power project in the Sampur area of Trincomalee.

Subsequently, the Adani Group signed a Memorandum of Understanding with the Sri Lankan government to build two renewable power projects of 500MW, with an investment of $500 million, in Mannar and Pooneryn in the Northern Province.