India will set up hybrid power projects in three Sri Lankan Islands off Jaffna in a bid to effectively replace the Chinese venture cleared by Colombo last year. A joint statement issued after a visit to Colombo by India’s foreign minister S Jaishankar said a memorandum of understanding had been signed to build the installations.
It’s not yet confirmed whether the plants in the new agreement are to be built on the same islands earmarked for the Chinese project. The power source and other details on the projects weren’t available.
India has for long been worried about the growing Chinese influence in the region. In 2019, 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, 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.
India considers Sri Lanka, just across the narrow Palk Strait off India’s southeastern coast, to be in its sphere of influence. The island nation in the middle of a key sea route connecting the east and west also is important to China’s ambitious “Belt and Road” global infrastructure initiative.
Had the Chinese power plant project been realized, it would have placed China next to India’s southern coast. India and China already have running border disputes in other regions.
Sri Lanka has approached both India and China for help. India provided a $1 billion credit line to buy essentials following a previous $500 billion to buy fuel. China is considering a request for $2.5 billion in economic assistance. Infrastructure projects that were built using Chinese loans but don’t make money are blamed for its debt crisis. Sri Lanka’s foreign reserves are dwindling but it has to repay $7 billion in foreign debts this year. China has been noncommittal to a request for debt restructuring. Beijing has invested billions of dollars in building a sea port, airport, roads and a port city on reclaimed land near Colombo harbor which the Sri Lankan government aims to develop into a financial city.