India has signed an agreement to set up hybrid power projects on northern Sri Lankan islands in a deal seen as a strategic victory in its competition with China for influence in the Indian Ocean.
Indian Minister of External Affairs Subrahmanyam Jaishankar, who is in Colombo for bilateral meetings, witnessed the signing, along with Sri Lankan Minister of Foreign Affairs Gamini Peiris, the Indian embassy said late on Monday.
In December, China announced its own project to build power plants on three Sri Lankan islands was suspended due to security concerns involving a “third party.”
Photo: EPA-EFE
An Indian official said he could not confirm if 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 were not available.
India considers Sri Lanka, just across the narrow Palk Strait off India’s southeastern coast, to be in its sphere of influence, while the island nation in the middle of a key sea route connecting the east and west, is also important to China’s ambitious “One Belt, One Road” global infrastructure initiative.
“It is kind of substantial victory for India,” said Lynn Ockersz, a senior journalist and foreign relations analyst in Sri Lanka.
“Overall, it will be in a great position to influence Sri Lanka when it comes to policy issues affecting India,” he said.
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.
Jaishankar is also taking part in the 18th Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, a meeting of Bay of Bengal nations Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand for economic cooperation.
The other agreements India signed include providing a maritime rescue coordination center and building fisheries harbors in Sri Lanka.
The agreements come amid Sri Lanka’s worst economic crisis in recent memory with shortages of medicine, fuel and milk power, and daily power outages lasting for hours.
Sri Lanka has approached both India and China for help. India provided a US$1 billion credit line to buy essentials following a previous US$500 billion to buy fuel. China is considering a request for a US$2.5 billion economic assistance from Sri Lanka.
Infrastructure projects that were built on Chinese loans, but do not make money are blamed for its debt crisis. Sri Lanka’s foreign reserves are dwindling, but it has to repay US$7 billion in foreign debts this year.
China has been non-committal 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.
The Sri Lankan government previously scrapped a plan to allow China outright ownership to land on the Colombo Port City and provided 62 hectares on a 99-year lease instead.
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