India to build power plants on Sri Lankan islands

COLOMBO, Sri Lanka – India on Tuesday signed an agreement to set up hybrid power projects on the northern islands of Sri Lanka in a deal seen as a strategic victory in its competition with China for influence in Indian Ocean.

Indian Foreign Minister Subrahmanyam Jaishankar, who was visiting Colombo, attended the signing with Sri Lankan Foreign Minister Gamini Peiris, the Indian embassy said.

In December, China announced that it was suspending its own plan to build power plants on three Sri Lankan islands for security reasons.

An Indian official said on Tuesday he could not confirm whether factories for the new deal should be built on the same islands earmarked for the Chinese project. Power source and other project details were not available.

India considers Sri Lanka, just across the narrow Palk Strait off India’s southeast coast, to be part of its sphere of influence. The island nation sits in the middle of a key shipping route linking East and West and is important to China’s ambitious “One Belt One Road” global infrastructure initiative.

India and China are rivals for influence in the region and have border disputes that have erupted in recent years.

“It’s kind of a substantial victory for India,” said Lynn Ockersz, a journalist and foreign relations analyst in Sri Lanka.

He said this would put India in a position to influence Sri Lanka regarding policy decisions that may affect it.

The canceled Chinese power plant project would have been near the southern coast of India.

Jaishankar was attending the BIMSTEC summit, a meeting on economic cooperation between the Bay of Bengal nations, Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.

India has also signed agreements on a maritime rescue coordination center and a fisheries project in Sri Lanka.

Sri Lanka is facing huge debt problems and going through its worst economic crisis in recent memory with shortages of medicine, fuel, fertilizer and milk. Daily power outages last for hours.

The debt crisis stems in part from infrastructure projects that have been financed by Chinese loans but are not bringing in any money. Sri Lanka’s foreign exchange reserves are shrinking as it has to repay $7 billion in foreign debt this year.

He approached India and China for help. India has provided a $1 billion line of credit to buy basic necessities and $500 billion to buy fuel. China is considering a request for $2.5 billion in economic aid, but has not committed to restructuring billions in debt.

China and Chinese companies have invested heavily in building a seaport, airport, roads and a port city on reclaimed land near the port of Colombo, which the Sri Lankan government aims to transform in a financial city.

The Sri Lankan government had previously scrapped a plan to allow Chinese outright ownership to land in the port city of Colombo. Instead, he provided 153 acres on a 99-year lease.

Sri Lankans line up to buy cooking gas in Colombo, Sri Lanka, Friday, March 25, 2022. Earlier this month, the Sri Lankan president asked for the support of the people by limiting the consumption of electricity and fuel to cope with the worst economic crisis in living memory. (AP Photo/Eranga Jayawardena)
Photo Sri Lankans line up to buy kerosene in Colombo, Sri Lanka, Friday, March 25, 2022. Earlier this month, the Sri Lankan president called for people’s support by limiting electricity consumption and fuel to deal with the worst economic crisis in living memory. (AP Photo/Eranga Jayawardena)
Photo Foreign Ministers of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) countries, from left to right, Narayan Khadka of Nepal, Subrahmanyam Jaishankar of India, Don Pramudwinai of Thailand, Gamini Lakshman Peiris of Sri Lanka, AK Abdul Momen of Bangladesh, Tandi Dorji of Bhutan and Wunna Maung Lwin of Myanmar pose for a photo as they meet in Colombo, Sri Lanka, Tuesday, March 29, 2022. (AP Photo/Eranga Jayawardena)
Photo Indian Foreign Minister Subrahmanyam Jaishankar, center, attends the Bay of Bengal Initiative for Multi-Sector Technical and Economic Cooperation (BIMSTEC) Foreign Ministers’ Meeting in Colombo, Sri Lanka, Tuesday, March 29, 2022 (AP Photo/Eranga Jayawardena)

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