Sri Lanka last week signed a deal with India’s Adani Group, awarding the latter two mega renewable power projects in the northern part of the country, as Colombo faces its worst power crisis, primarily caused by the foreign exchange crisis, in decades. 

The renewable power projects will be jointly developed in Mannar, on Sri Lanka’s north-western coast, and Pooneryn, located just south of Jaffna Peninsula, from the Sri Lankan side, reported Colombo-based Sunday Times.

The report said the two projects worth around $500 million are estimated to have a combined capacity of $500 megawatt of electricity.   
Signed on Friday, the deal saw no official announcement either from the Sri Lankan authorities or the Adani Group, fueling concerns, in some quarters in Sri Lanka, related to the details and transparency. 

Significantly, for the Adani Group, this is the second major deal in Sri Lanka after it bagged the contract for the strategic West Coast Terminal of Colombo Port six months ago. Gautam Adani, the chairman and founder of the group, had visited Colombo last year, and discussed the potential investment opportunities with Sri Lankan President Gotabaya Rajapaksa. 

Interestingly, the deal comes at a time when the country has been facing a multiply interlinked crisis caused by the persistent forex crisis. Sri Lanka received assistance worth $1.4 billion from India and is awaiting another $1 billion.  

Basil Rajapaksa, the country’s Finance Minister and part of the ruling Rajapaksa clan, is expected to visit New Delhi this month. His scheduled visit was canceled on two occasions earlier as two countries reportedly continued negotiating terms and conditions. 

A few reports in Sri Lanka media suggest New Delhi has been looking to secure its key strategic interests, mainly in the crucial power sector, in the country’s northern part, a region where India traditionally enjoys significant political support. The northern region is now actively being courted by China also. 

For New Delhi, energy cooperation with neighboring countries remains one of the key pillars of its Neighborhood First policy, Indian Foreign Secretary Harsh Vardhan Shringla had also said it last week. India has taken lead in creating power capacity in the region, the foreign secretary added. 

Furthermore, India remains wary of Chinese investments in the energy sector in Sri Lanka, especially in the areas in close proximity to its land border. Last year, Colombo had to cancel a deal it had awarded to a Chinese firm for building renewable power projects in the islands off the Jaffna coast, hardly 50 km from India’s coast in Tamilnadu. 

(SAM)